Writing Off a Bad Debt

If an amount (or part of an amount) becomes uncollectable, you will need to write it off as a bad debt. Use this procedure to write off the entire invoice or a portion of an invoice.

Preparation

You will need the following information to post each entry:

  • Company #
  • GL Cash Account
  • Deposit Date (write off date)
  • Customer Number
  • Check Number
  • Payment Type
  • Payment Amount
  • Adjustment (write off) amount

To write off a portion of an invoice

  1. Click Accounts Receivable, and then click Payments.
  2. Enter the Customer Number, or use the Quick Lookup feature to locate the Customer Number.
  3. In the Payment Amount field, type the amount of the payment received.
    In our example, we will use $3200.00 as the payment amount and we have agreed to write off $306.48 from Invoice # 883.
    We will enter $3200.00 in the Payment Amount field.
  4. In the Payment Type field, type or select Check.
  5. Enter the Check Number of the partial payment.
  6. Select the Company Number that the invoice belongs to.
  7. On the GL Cash Account field, type or select the account where the you will post the payment. For more information on GL Cash Accounts, see Learning about Default Cash Accounts.
  8. In the Deposit Date field, type the date when the decision was made to write off the debt.
  9. Select the Apply? check box next to the invoice where you want to apply the payment.
    Once you click the Apply? check box, the payment moves from the Outstanding Invoices >grid to theApplied Invoices >grid.
  10. Notice that there is $306.48 for this invoice still outstanding.
  11. Click the Apply? check box for Invoice Number 883 in the Outstanding Invoices area.
  12. Once you click the Apply ? check box, a message displays confirming the adjustment.
  13. Click Yes.
    The remaining invoice moves from the Outstanding Invoices grid to the Applied Invoices grid.
    Notice the Applied Amount displays $0.00.
  14. In the Applied Invoices grid, select W/O in the Type field.
  15. Enter $306.48 in the Adjustment Amount Field.
  16. Enter the Job # to apply the write off to.
  17. You may require a password to proceed (if one was set up in AR: Defaults).
  18. Enter $306.48 in the Applied Amount field. Your invoice amount is now $0.00.