When using the allowance method, after company has previously written off an account, the company cannot collect from these customers because their accounts have been written off the company continues to send monthly statements to the customers whose accounts have been written off when a customer pays on an account that has been written off, the company needs to reverse the write - off to the Allowance for Bad Debts account and then record the receipt of cash the company does not need to re - establish the receivable account