CenterPoint® Fund Accounting - Bad Debt Write Off

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Bad Debt Write-off Video - Duration: 3 min 12 sec

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This document will explain how to write off a customer's unpaid balance. A write-off of accounts receivable has no effect on income/sales. It is simply a removal of the receivable and an increase of an expense (bad debt expense).

Step A: Create a Bad Debt Payment Type

Step B: Write Off an Accounts Receivable

Step C: Reporting Debts Written Off

Prerequisite

You must have a Bad Debt Expense account (Setup > Accounts > Accounts) in the database. This account should have Expenses identified as the Category.

Step A: Create a Bad Debt Payment Type

  1. Select Setup > General > Payment Types. Click New.

  1. Enter "Bad Debt" or something similar in the Name field.
  2. In the Type of Payment field, select Other as you will not be receiving cash or check payments for these A/R invoices.
  3. Specify your Bad Debt Expense account in the Account field.
  4. Click Save.

Step B: Write Off an Accounts Receivable

  1. Select Processes > Sales > Receipts.

  1. Specify the appropriate customer in Received From.
  2. Specify the Date the amount should be written off.
  3. Specify the appropriate Amount. The amount does not have to equal the customer's current balance. A portion of their balance can also be written off.
  4. In the Payment Type field, select the Bad Debt Write Off (setup in Step A).
  5. Click on the Apply to Open Invoices button.

  1. Select the invoices to be written off by selecting the appropriate Pay boxes. If the entire balance should be written off, click on Pay All instead.
  2. Click OK .
Note: From the original Receipts screen, if you want to attach a document to this transaction, see the Attach Documents to Transactions topic for detailed information.
  1. Click Save on the original Receipts screen.

Step C: Reporting Debts Written Off

A report can easily be used to review which customer balances have been written off during a specific date range.

  1. Select Reports > Reports > Transaction Reports > Receipts > Non-Cash Receipts by Payment Type.
  2. In the Report Selections, select the date range (Receipt Date) to be reviewed. Also select Bad Debt Write Off in Payment Type.

  1. Click Preview or Print. A list of customers balances that were written off during the selected date range will be displayed.

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