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.