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There are two reasons why the direct write-off method is not allowed.

First, applying the matching principle implies that the cost of the uncollectible accounts need to be expensed in the period of the sale. Giving credit to customers helps to generate sales (if this were not the case, the firm would simply demand payment at time of delivery). Thus, not creating an allowance violates the matching principle.

Second, with the direct write-off method, accounts receivable are at the nominal value, whereas the 'true' value (the amount that is expected to be collectible) is most likely lower. Thus, the direct write-off is likely to overstate the value of accounts receivable.

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