Make provision for bad customer debt

Marking a transaction for provision

• All transactions for which provisions have been made have a query flag of W set.
• You cannot pay any invoices you have provided for, until you reverse the bad debt provision.

• The total of the transactions (including VAT), are credited to the provisions for bad debts nominal account (balance sheet). A corresponding entry is made in the bad debts account (profit and loss).

  Note: If you have specified a cost centre and department for the default sales nominal account on your customer's account, you must create a nominal account for bad debts with the same cost centre and department. For example, a customer has a default sales account of 31100 SAL COM. The bad debt provision is posted to the profit and loss nominal account 68100 (Bad Debts) SAL COM. If there is no bad debt nominal account with the relevant cost centre and department, the bad debt provision is posted to the suspense account.

Correcting a provision

• The query flag of W is removed.

• The total of the transactions (including VAT) are debited to the provisions for bad debts nominal account (balance sheet) and a corresponding entry made in the bad debts account (profit and loss).

  Note: If you have specified a cost centre and department for the default sales nominal account on your customer's account, you must create a nominal account for bad debts with the same cost centre and department. For example, a customer has a default sales account of 31100 SAL COM. The bad debt provision is posted to the profit and loss nominal account 68100 (Bad Debts) SAL COM. If there is no bad debt nominal account with the relevant cost centre and department, the bad debt provision is posted to the suspense account.

• Specify the default nominal accounts for your bad debts in the Nominal Ledger.
• Enter the statutory Waiting period for recovery of bad debts value in the Sales Ledger settings Customer defaults tab. (This was 6 months as of July 2009.)

Open: Sales Ledger > Adjust Transactions > Provisions for Bad Debt.

1. Select the customer A/C ref.

   The customer details are displayed. For each qualifying transaction that is unpaid, the Trans Type, Trans Date, Reference, 2nd Ref., Outstanding, Value, Tax value (in customer's base currency) and Qry (query flag) are displayed.

2. Filter transactions by entering a value in Select transactions with values up to box, if required. This may be necessary if you have lots of transactions on your system.
3. Select the transaction required and click Make Provision. This opens a new window, displaying the nominal analysis for the transaction.
4. Amend the Narrative if required.
5. Click OK.

Open: Sales Ledger > Adjust Transactions > Provisions for Bad Debt.

1. Select the customer A/C ref.

   The customer details are displayed. For each qualifying transaction that is unpaid, the Trans Type, Trans Date, Reference, 2nd Ref, Outstanding, Value, Tax value (in customer's base currency) and Qry (query flag) are displayed.

2. Filter transactions by entering a Select transactions with values up to value, if required.
3. Select the transaction required (one marked with a query flag of W) and click Correct Provision. This opens a new window, displaying the nominal analysis for the transaction.
4. Amend the Narrative, if required, and click OK.