Sales > Accounting for bad debts
Accounting for bad debts
When you know that a debt will not be recovered, you need to write it off.
Before you can write off a bad debt, you need to create a Bad Debt expense account in your accounts list. For more information, see Set up accounts).
To write off a bad debt, you need to create a credit sale for the customer.
1
Go to the Sales command centre and click Enter Sales.
2
In the Sales window, click Layout.
3
In the Select Layout window, 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 No. field, select the account for Bad Debts.
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 select that account.
7
In the Amount field, type the bad debt amount as a negative number.
8
Click Record.
You now need to apply the credit against the customer’s original open invoice. You do this in the Settle Returns & Credits window. See To apply a customer credit to an open invoice.
Related Topics
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Credit control
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Reviewing your sales information
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Financial control

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