Transfer to Bad Debt
Explanation
This activity is used to classify an invoice as a bad debt instead of writing
it off directly. This is because customers may occasionally be unable to pay
their debts, but if they are likely to be able to pay in the future you may
chose to classify these customer invoices as bad debt instead of writing them
off directly. You can still pay the invoices directly, or you can reverse the
bad debt classification back to Normal and then pay the invoice.
- In the Bad Debt Management page,
select the invoice you want to transfer to bad debt, command and then click
Transfer to Bad Debt.
- Specify the bad debt level to be applied for the Invoice in the Bad
Debt Level field. The default bad debt level will be displayed automatically.
You can also use the List of Values to select a bad debt level. Once the
bad debt level is selected, the provision percent is automatically
displayed, if it has been defined for the relevant bad debt level.
Prerequisites
- The bad debt level(s) must have been defined beforehand in the
Bad Debt Levels
page.
- Posting type PP15 - Bad Debt Transfer must be defined
in the Posting Control
page.
- If bad debt provision is to be calculated, posting types PP73
to PP75 must be defined in the
Posting Control
page.
- No other payment transaction with later voucher dates should exist for
the relevant invoice (this does not apply to rolled back transactions).
System Effects
The ledger status of the invoice changes from Normal to
Bad Debt. The ledger posting is also changed from posting type IP2
to PP15. If a provision percent is defined for the selected bad
debt level, bad debt provision will be calculated and posted to posting types
PP73 and PP74.