Accounting for bad debts

When you know that a debt will not be recovered, you need to write it off.

Before writing off a bad debt, create a Bad Debt expense account in your accounts list. For information about creating accounts, see Set up accounts.

To write off a bad debt

1	Go to the Sales command centre and click Enter Sales. The Sales window appears.

2	Click Layout. The Select Layout window appears.

3	Click Miscellaneous and then click OK.

4	In the Customer field, type or select the customer’s name.

5	In the Description field, type a description of the transaction.

6	In the Acct# field, type or select the account for Bad Debts.

7	If you account for bad debts by posting a provision to an asset account (for example, the Provision for Bad Debts asset account), you can type or select that account.

8	In the Amount field, type the bad debt amount as a negative number.

9	Click Record.

10	In the Settle Returns & Credits window, apply the credit against the original open invoice. For more information, see Customer credits.

Related topics

■	Credit control

■	Financial control

■	Reviewing your sales information