You use this option to clear bad debts from the ledger, and ensure that the invoice and tax amounts are posted to the correct place in the nominal ledger where linked. If the foreign currency application is in use, then you can use this procedure for base currency accounts but not for other currencies, for these you should enter a manual credit note selecting the appropriate ‘bad debt’ nominal code for analysis.
First you are asked to confirm the date for this action. Note that this date must be in the current period — you cannot choose a date in the next period. Next you choose the account to process, <F4-Select> is available as required, any invoices marked as bad debts are now displayed and for each one in turn you are asked: write off bad debts?
You are prompted N, but if you decide to write off the invoice you reply Y. If you reply Y, then the tax amount for the invoice is displayed. If none of the invoice has been paid off yet, then this is the original tax amount when the invoice was first entered. If the invoice is partly paid, however, then the tax amount displayed is the pro-rata tax value of the amount left unpaid.
You can accept the calculated tax value, or overwrite with a different value. Once you have reviewed the flagged transactions then the total bad debt is shown to you.
If you want to abandon the action, press <Escape> now. If you press <Enter> then the invoices you have marked are written off as bad debts. You are now asked if you wish to post the bad debt as a credit note, which gives you one final chance to stop the action.
If you reply ‘Yes’ then a credit note is written against the account. It is allocated against the invoices you have chosen to write off. The tax amount is the sum of the tax amounts you accepted; and the net amount is marked for posting against the nominal ledger account specified for bad debts in the ledger System Profiles.
Note
There are statutory rules concerning how and when you can write off bad debts and reclaim the tax. You must make sure you know the current legislation and act according.
Article ID: 1284
Created On: Mon, Jul 2, 2012 at 10:19 AM
Last Updated On: Mon, Jun 19, 2023 at 4:03 PM
Online URL: https://kb.datafile.co.uk/article/write-off-bad-debts-1284.html