Write off bad debt

To write off bad debt, create a separate batch in the cash receipts posting screen. This batch is for adjustment purposes only. Do not intermingle it with regular cash receipts.

If bad debts should be included in the current year’s financials...

write them off before closing Accounts Receivable for the last month of the current fiscal year. If you pay taxes on an accrual basis, there is a possibility that tax has been remitted for uncollected sales. Check with your CPA to find out if sales tax should be credited on the customer’s account before the account is written off. Inform allows the tax to be credited on an invoice by invoice basis through the Cash Receipts Posting function. See Enter sales tax credits and debits.

1. Go to Accounting > Accounts Receivable > Cash Receipts Posting.
2. In the Customer box, type or select the customer's account number, and then press the Tab key to populate the available information. Note that the Bank G/L defaults to the main bank.
3. From the Payment Type list, select Check.
4. In the Check Number box, type a unique identifier, such as BDMMYY, for Bad Debt Date.
5. In the Posting Date box, keep the current system date. Changing the date will not affect the accounting period.
6. In the Amount box, type 0. (The number zero.)
7. To selectively write off invoices, select the invoice, and then type the amount to be written off as a positive value in the Adjustment column. Make sure that the Cash Applied column is blank.
8. Click the magnifying glass in the Adj G/L and select Bad Debts G/L.

   

   Note: Alternatively, you can use the Adjustments field at the bottom right of the screen to write off the entire balance. 

9. Repeat this procedure to input all bad debts, and then click Save.
10. Go back to the Cash Receipts Posting page and click Print and Post to A/R.

    

    Inform ERP automatically debits the Bad Debts G/L account and credits the Accounts Receivable G/L account.

Tax Note
If taxes are paid on an accrual basis, it is possible that tax has been remitted for uncollected sales. Check with your CPA to find out if sales tax should be credited on the customer’s account before the account is written off. Inform ERP allows the tax to be credited on an invoice by invoice basis through the Cash Receipts Posting function.