Inventory finance
Inventory Write-Off
By the Supply Chain Manager team · Updated October 16, 2026
An inventory write-off removes stock from the books, or cuts its value, because it has been lost, damaged, has expired or can no longer be sold.
A write-down reduces the recorded value to what the stock can realistically fetch; a write-off removes it entirely. Either way, the loss hits profit. The accounting treatment is for your accountant; the operational question is how to stop it recurring.
Write-offs are easier to prevent than to recover. Watching days of supply and sell-through on new or slow lines, and acting while the stock still has some value through returns, transfers or discounts, nearly always recovers more than disposing of it later.
Inventory write-off example
Illustrative numbers: 500 units of an expired adhesive at $3 cost are disposed of, a $1,500 write-off. Looking back, the order that created them was three times the SKU's typical monthly sales, placed to hit a price break.
Why inventory write-off matters for distributors
Write-offs are the final cost of overstock and poor rotation. Tracking them by cause, such as expiry, damage, obsolescence or count variance, shows which upstream decision to change.
Common inventory write-off mistakes
- Delaying write-offs, which overstates inventory value and hides the problem.
- Writing stock off without recording the reason.
Examples on this page use made-up round numbers to show the calculation. They are not benchmarks or results from real businesses.