Write-off a sales invoice to bad debt

These steps show how to move the outstanding balance to the Doubtful Debt ledger account and then to the Bad Debt account.

TIP: Before following the procedures below, first verify that the necessary ledger accounts are visible and available for selection in the applicable areas.

Chequing ledger account visibility 

1. Go to Settings (in Start, select More), then Business Settings.
2. Under Financial Settings, click Chart of Accounts.
3. Search for the Doubtful Debt ledger account by entering "Allowance for Doubtful Debt" in the Search field.
4. Click the Doubtful Debt account to open the Edit Ledger Account window.
5. Under Visibility, select Sales - Invoice / Credit, Product / Services / Customer defaults (in Start, select Sales).
6. Click Save.
7. Search for the Bad Debt ledger account by entering "Bad Debt" in the Search field and then repeat steps 5 and 6.

Moving the Outstanding Balance 

1. Select Sales, then Sales Invoices.
2. Select the appropriate Unpaid Sales Invoices.
3. Change the ledger account to Doubtful Debt Account.
4. Ensure the outstanding balance matches the Total field in the credit note.
5. Select Save.

Posting the bad debt amount 

 NOTE: When you're sure the debt is unrecoverable, create a journal entry to move the amount from Doubtful Debt to Bad Debt. 

1. Select Adjustments (in Start, select More).
2. Select Journals.
3. Select New Journals.
4. Add a Reference.

EXAMPLE: To move the amount from the previous example, create the following journal entry:

CAUTION: This information is for reference only. Contact your accountant for advice on managing your financial records.