Proper way to write off customer invoice

eagle_eye

Suppose I have an invoice for $1000. The customer paid $800 and is never going to pay the rest (and is not going to return the goods). I know this information at the time I receive the check (that all I am going to get is $800 only). Is there something I can do at the time I am applying this payment that will close the invoice and write the rest off? (i.e. maybe the goods were damaged and will never bee returned and i just want to write off the amount and be done and close the invoice).

Thank you.

themave

Yes, you can do it at the time your record the check, by using the Max Payment Tolerance column on the apply entry screen. typical this is used to write of a small amount, but there is no limit.

so when you record your payment, enter in the this column, $200, and it will clear the invoice for the full amount recording 800 as a payment and $200 to your payment tolerance account, (which in our case is our bad debt account) You set the Payment tolerance g/l account in Customer Posting Group setup

kapil4dynamics

You can use payment tolerance but it allows you to set a fixed figure or % , which i usually set, but there is flip side of that If u have set 10% as tolerance and r receiving 9 grands out of supposedly 10 it will settle it. But u can have tolerance warning setup, which prompts user to check. If user is using system carefully then u shud have no issues.

Or the other workaround which is nor very favorable (as this is tolerance) u can treat it as payment discount, though this will be easy.

Alex_Chow

The last option is to issue a credit memo to the remainder of the balance. For such a large amount, you may not want to treat it as a discount or tolerance. Rather, it should be treated as bad debt?

David_Singleton

I am with Alex on this one. For amounts this large, create a Credit Memo.

DenSter

Would you issue a credit memo for bad debt? That's more the reverse of an invoice, and is as if the invoice was never issued. Or would that be against a G/L account rather than crediting for items/resources of the original invoice?

David_Singleton

eagle_eye wrote:

(i.e. maybe the goods were damaged and will never bee returned and i just want to write off the amount and be done and close the invoice).

I was reading this.

Either way for amounts like this you want documentation of what happened. Obviously you wont have item lines, just GL lines, but this give you a proper audit trail.

idiot

One of my clients uses payment with reason code baddebt to apply to the invoice.
The Sale actually happened but the payment was not made so Credit Note is not the way as it would reduce the Sales. It can be considered as the company paid for the customer.
This is actually a work around as Nav does not have any facility for bad debts & the customer actually requested for customization.
Take note of reports...