Educational process guidance for Philippine microfinance and small lending desks — not legal advice. Confirm write-off thresholds, sign-offs, and ledger treatment with your compliance lead and external counsel before you change policy.
Collections has chased the account for months. The borrower stopped answering. The guarantor number is dead. Field visits keep coming back empty. Someone on the desk wants to stop chasing and clear the book—but if you write off without a clear write-off approval chain, you get three problems at once: an officer who stopped too early, a ledger that cannot explain the loss, and an audit file that looks like a quiet favor.
The short answer: name who may propose, who must review, who may approve by remaining-principal band, what evidence must already sit on the loan file, and freeze collections only after that stamp exists. Keep the trail on the same loan record your LMS already holds—roles, notes, docs vault, and maker-checker—not in a chat thread that dies when the phone is replaced.
This guide is for Philippine money lenders and small MFIs that still decide write-offs at a branch or head-office desk. You will get a role × approval table, a decision framework for write-off vs keep chasing vs restructure, the evidence pack that should sit beside every sign-off, a numbered desk checklist, a worked peso example, and the traps that turn a write-off into a control failure. Soft note: dual control on money movements is the same discipline as dual-control cash vault logs and maker-checker on disburse and repay—apply it to losses, not only to cash out.
Who this is for (and who can skip)
Use this now if you run a multi-officer or multi-branch PH money-lending or small MFI desk, write-offs are decided in chat or on a whiteboard, PAR drops after a “cleanup week” with thin files, or two branches use different informal rules for when chasing stops—especially when officer exits orphan chase notes.
You can keep a lighter version if you already have paper dual sign-off and a finance queue—but still move the trail onto the loan record. A true one-person desk needs a one-page band table, not committee theater.
This article is general operational guidance. It is not legal, tax, accounting, or regulatory advice. How write-offs appear in your books, how SEC rules for lending and financing companies apply to your license, and any BSP expectations that touch your charter can all matter. Confirm with your compliance officer or counsel before you change customer-facing language or ledger treatment.
What a write-off approval chain actually is
It is not “collections marked closed on the board.” A defensible write-off approval chain for PH lenders names who may propose, who must review, who may approve by ticket size, what evidence must already be on file, and how the ledger entry is labeled so finance and audit can reconstruct the decision later. It is a desk process, not a separate product module you wait to buy.
At minimum a solid chain should show:
- Proposal owner (usually collections or the assigned loan officer) with a written reason code
- Evidence pack: last contact attempts, DPD history, guarantor chase log, field visit notes, and any legal or barangay steps your policy requires
- Reviewer who is not the proposer (maker-checker style)
- Approver keyed to ticket size or remaining principal bands
- Ledger treatment note: principal vs interest/fees, date, and reference ID on the loan
- Collections freeze so the desk stops chasing only after approval, not before
If chasing stops the day an officer “feels done,” you have informal abandonment—not a write-off process. Pair the freeze with collection receipt discipline so cash that still arrives after a freeze is posted, not parked in a side notebook.
Why desks skip the chain today
Most skips are process friction, not bad intent:
- No amount bands. Every write-off needs the same signature, so small tickets clog the manager and large tickets get waved through verbally.
- Proposal equals approval. The same officer who stopped dialing also “closes” the file with no second pair of eyes.
- Evidence lives in chat. Visit notes and guarantor attempts sit in Messenger threads that vanish when the phone is replaced.
- Ledger lags the decision. Collections stops chasing weeks before finance posts the write-off, so PAR and cash recovery reports disagree.
- Restructure never considered. Write-off becomes the default when a restructure vs rewrite path might still recover something.
- Promise-to-pay theater. Verbal PTPs keep resetting the clock with no dated board, so the account never reaches a real write-off gate—see promise-to-pay follow-up board.
Fix the roles, the evidence gate, and the freeze flag, and write-offs become boring again—which is what you want in a control environment.
Decision framework: write off, keep chasing, or restructure
Before anyone opens a write-off proposal, force a one-page choice. Adjust the thresholds to your book; the point is a shared vocabulary, not a universal peso rule.
| Signal | Prefer keep chasing | Prefer restructure / rewrite talk | Prefer write-off path |
|---|---|---|---|
| Borrower locatable and partially paying | Yes — tighten visit cadence; log PTP dates | If cash flow broke but intent remains | No — premature |
| Borrower locatable, zero pay, DPD rising | Short window with guarantor pressure | Offer once if policy allows and docs clean | Only after offer recorded refused / not eligible |
| Unlocatable; guarantor unreachable; field notes empty stalls | Only if new skip-trace tip arrives | Usually not — no counterparty to sign | Yes — run the chain with full evidence pack |
| Cost-to-collect already exceeds plausible recovery | Stop escalating visit intensity | Rare — unless a lump settlement is on the table | Yes — still run bands/roles; do not skip paper because “obvious” |
| Dispute on maturity, schedule, or receipts | Pause chase language; fix the file first | May need schedule rewrite under dual control | Do not write off a data fight — see maturity vs last installment |
Hard rule: cost-to-collect is an input, not a substitute for approval. Even when cost-to-collect by DPD already exceeds plausible recovery, still run the chain. Early arrears work belongs in prevention—see early warning signals before DPD-7—not as a quiet excuse to abandon mid-bucket accounts.
Original element: role × approval table
Use this as a starting policy skeleton. Adjust peso bands to your book size; the point is named roles and dual control, not one universal threshold. Map roles to the same staff permissions model you already use for cashiers and officers—see staff roles and branch permissions.
| Remaining principal band | Proposer | Reviewer (must differ) | Final approver | Minimum evidence before sign-off |
|---|---|---|---|---|
| Up to ₱5,000 | Collections officer / LO | Branch cashier or senior LO | Branch manager | Contact log (call/SMS/visit), DPD printout, reason code |
| ₱5,001–₱25,000 | Collections lead | Branch manager | Area / ops manager | Above + guarantor chase log + last field visit note |
| ₱25,001–₱100,000 | Branch manager | Ops / credit head | General manager or designated credit committee seat | Above + legal/barangay steps if policy requires + recovery cost note |
| Above ₱100,000 | Ops / credit head | GM + finance | Owner / board designate (two signatures) | Full pack + written cost-to-collect vs expected recovery memo |
Hard rule: the proposer cannot be the final approver on the same ticket. Soft rule: store the signed pack on the loan document vault so officer exits do not orphan it—see loan-file document vault.
Numbered desk checklist before you stop chasing
- Confirm identity of the account. Loan ID, borrower name, remaining principal, and product match the LMS screen—not a handwritten board row.
- Pull the chase log. At least the last policy-required attempts (call, SMS, visit) with dates and outcomes.
- Check guarantor and co-maker. Document that those contacts were tried or marked unreachable with reason.
- Ask restructure once. If policy allows a restructure or rewrite, record “offered / refused / not eligible” before write-off.
- Fill the proposal. Reason code, amount band, proposer ID, date—on a form or loan note your policy names, not a chat “sige.”
- Route for review and approval. Use the table above; no verbal-only closes for tickets above your smallest band.
- Post ledger + freeze collections. Same day when possible: write-off entry reference on the loan, then stop-chase flag so field staff do not keep visiting a closed loss.
- File the pack. Keep proposal, approvals, and evidence on the loan document vault—not only in email.
- Sample five write-offs next month. Branch manager pulls five closed losses and checks pack completeness; incomplete packs become training, not blame theater.
Worked example: ₱18,400 remaining, weekly market float
All figures below are illustrative for training a desk—not a live borrower.
- Status. Borrower stalled at DPD 120+. Last three field visits: closed stall, neighbor says borrower moved. Guarantor SMS undelivered twice.
- Framework check. Unlocatable + guarantor unreachable → write-off path, not another vague PTP week.
- Band. ₱18,400 falls in the ₱5,001–₱25,000 row.
- Propose. Collections lead files reason code “exhausted field + guarantor unreachable,” attaches visit notes and LMS DPD export.
- Review. Branch manager confirms proposer is not the reviewer and that restructure was marked not eligible (borrower unlocatable).
- Approve. Area manager signs; the loan file stores approver name/ID and timestamp.
- Ledger + freeze. Finance posts write-off reference WO-2026-1042 on the loan; collections freeze turns on the same afternoon. Field roster no longer shows the account for tomorrow’s route.
Contrast the failure path: officer stops dialing, marks “done” on a whiteboard, and finance discovers the balance three months later during PAR cleanup. No approver, no evidence pack, no freeze—just a silent hole in the book.
Traps that break the audit story
- Verbal GM approve. A phone “sige, write it off” without a stored signature or system stamp fails when ownership changes.
- Write-off before freeze. Field staff keep collecting cash with no LMS ticket, then the account is already off the books.
- Interest written off, principal forgotten—or the reverse—without a clear note. State what was written and what remains.
- Bulk Friday dumps. Mass write-offs without per-account evidence look like earnings management, even when intent was cleanup.
- Same person proposes and approves. Breaks maker-checker; fix the workflow, not the memo.
- Treating schedule disputes as losses. Fix maturity and last-installment mismatches before you call the balance dead.
- Skipping guarantor chase because “they never pay.” Document the attempt; “never” without a log is not evidence.
Where PesoLend fits today
In PesoLend, staff already work loans, repayments, branch-scoped roles, maker-checker on sensitive money movements, loan-file documents, and PAR/arrears-style reports. There is no separate named write-off module—and you should not wait for one. Run the chain as desk process: proposal on the loan file, dual control, evidence in the document vault, ledger reference, then freeze after approval. Existing teams can log in to PesoLend to keep the trail where the next officer will find it.
Ship order for one sprint (process, not a new product)
- Publish peso bands and named roles; ban proposer = final approver.
- Require a write-off proposal form (paper or loan note) with a mandatory evidence checklist.
- Block collections freeze until the approval stamp exists; require a loan reference on the ledger post.
- Train one branch for two weeks; sample five write-offs for complete packs.
- Roll out; review override and bulk requests monthly so “cleanup” does not become the new skip.
Frequently asked questions
Is a write-off the same as stopping field visits?
No. Stopping visits without ledger treatment and approval is informal abandonment. A write-off approval chain ties freeze, ledger reference, and dual control together so PAR, finance, and field roster agree.
Can the branch manager both propose and approve small tickets?
Not under this skeleton. Even on the smallest band, proposer and final approver must differ. If the branch is truly one person, use an owner or area designate as the second signature—or accept that your control story is weak and document that exception in writing.
What if cash arrives after the freeze?
Post it. A freeze stops planned chase; it does not authorize ignoring money. Receipt and LMS must still agree, then decide whether the recovery reverses or reduces the written-off amount per your finance policy.
Do we need a barangay or legal step on every account?
Only if your written policy says so for that band or product. Empty “legal done” checkboxes are worse than an honest “not required under policy.”
Where should the evidence pack live?
On the loan file—document vault and dated notes. Chat exports are backups, not the system of record.
Next step: print the role × band table, ban proposer = final approver this week, and sample five recent “stopped chasing” accounts for missing packs. Fix the process before the next cleanup Friday invents another silent hole.