How do I write off bad debts?

Summary

This article explains how to write off a bad debt.

Remember: To check the V.A.T. rate of the invoice prior to posting. Make sure the Credit is posted with the same rate of V.A.T. In order to use the old Vat rate you must: Press <Alt-V> at the main menu (first screen after you have logged into Platinum) and confirm that you wish to temporarily change your V.A.T. rate to the old rate. Process the credit note at the old V.A.T. rate. Once you have completed the credit note, you must exit from your current option back to a menu as before which will revert the V.A.T. back to the current rate.

Note: Remember that there are time constraints as to when an invoice can be written off as a bad debt. Under current legislation, if your customer goes bust, you must wait six months before you can claim back any V.A.T. Check the HMRC website or with your accountant for the rules regarding this.

More Information

• Go to " Sales Ledger Invoice/Credit Notes".
• On the "Date :", enter the date on which you wish the debt to be written off.
• Set the "Invoice/Credit :" to 'C'.
• On the "Account :", enter the 'account' for the customer who has the bad debt.
• On the "Sales Centre :", enter the 'Sales Centre' for 'Bad Debt' and press <Enter>.

If you do not have a "Bad Debt" centre you will need to create one. See the article - How do I Create a Sales or Purchase Centre? ). Make sure that it is linked to a nominal code which is created as a 'Profit & Loss - Overhead' (see article - How do I Create a Nominal Code?).

• On the "Analysis Codes", press <Down Arrow> key.
  • This will load up a new screen called "Document To Credit Selection" which will list the outstanding invoices for the account.
  • Select the correct invoice you want to "write off" and click [OK], which will automatically fill in the "Document :".
• On the "Comment: ", type 'Bad Debt', and press <Enter>.
• Click the [Invoice] button at the bottom of the page or press <F5>.
• On the new screen underneath the '"Product Description" enter a reason for the "Write off", then press <Right Arrow>.
• Below "Total Nett" enter the net amount of the invoice to be written off.
• Click [Invoice] or press <F5> which will show a summary of the credit.
• Click [Invoice] or press <F5>, which will print out the credit note.
• Click [Accept] and the Debt will be credited off.

See Also

• How do I Allocate a Payment to an Invoice?
• How do I call up the CRM?
• How do I print an Aged Debtor or Creditor List?
• How to process a month end
• How do I Create a Sales or Purchase Centre?
• How do I Print a List of Sales Centres?
• How do I Print a List of Purchase Centres?
• How do I Create a Nominal Code?
• How do I Post a Journal with VAT Involved?
• How do I Send Debt Chasing Letters?

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Keywords AND Misspellings

Write, Debt, Write-off, Remove, Cancel, Bad, Payment, Debts, Negative,