How to Write Off a Customer Invoice or Bad Debt in Sage 100 Accounts Receivable

In the world of business, it's a reality that not all invoices will be paid. Customer insolvency, disputes, or simple unwillingness can sometimes result in bad debt - an unfortunate pitfall in the financial landscape. Fortunately, with the right tools, such as Sage 100 Accounts Receivable, businesses can manage and write off these unpaid invoices seamlessly.

In this comprehensive article, we delve into the process of writing off customer invoices or bad debt in Sage 100 Accounts Receivable. Sage 100 is a powerful tool in managing your company's finances and ensuring that your books accurately reflect your financial status. We'll break down this process step-by-step, helping you transform what could be a stressful and complex task into an efficient, manageable procedure.

Whether you're new to Sage 100, or an experienced user looking to refine your skills, this guide will equip you with the knowledge to effectively handle bad debts and improve your overall financial management. So let's delve in and demystify the process, enhancing your confidence in dealing with these inevitable business scenarios.

 

How to Write Off a Customer Invoice or Bad Debt in Sage 100 Accounts Receivable

Note: Creating a cash receipt in Accounts Receivable, Cash Receipts Entry is the easiest way to write off a bad debt, but it also may be accomplished by issuing a credit memo against the invoice or by adjusting the invoice. You can also write-off a portion of an invoice.

Note: It is up to you and/or your accountant to determine the correct General Ledger account to post to when processing write-offs or bad debts.

To write-off an entire invoice or multiple entire invoices:

1. Open Accounts Receivable, Main menu, Cash Receipts Entry

  • Note: If you have batch processing enabled, the Cash Receipts Entry Batch window appears:

  • Click Accept

  • Select the Private Batch check box if desired (to prevent access by other users)

  • Enter a Comment if desired

  • Enter the Batch Number (or click the Next Batch button for the next available batch number)

 2. In the Cash Receipts Deposit window:

  • Enter the Deposit Number (or click the Next Deposit Number button for the next available deposit number), Description, Bank Code, and Deposit Date

  • For the Cash Deposit Amount, to write off an entire invoice, enter 0.00 and click Accept.

3. In the Cash Receipts Entry, window:

  • Enter the Customer Number (or use the Lookup button to select from a Customer List)

  • For Deposit Type, select Cash from the dropdown list

  • For Check No., enter something like BAD DEBT or WRITE-OFF

  • On the Header tab:

    o   For Amount Received, verify the value entered is 0.00

  • On the Lines tab:

    o   For each invoice to be written off:

    §  Create an Invoice line (leave the Line Type value in the secondary grid as Invoice)

    §  For Invoice No., enter the invoice number (or use the Lookup button to select from an Invoice List

    §  For Amt Posted, enter the full amount of the invoice if writing off the full amount.

    o   For the G/L account to offset:

    §  Create a GL Account line (change the Line Type value in the secondary grid to GL Account)

    §  Enter the GL Account number for the bad debt or write-off posting

    §  For Amt Posted, enter the full amount to be written off, as a negative value

    Example: If the total amount(s) posted for the invoice(s) equals $50, then enter -50.00

  • Click Accept

  • Click the Print (printer icon) button to print and update the Cash Receipts Journal

For partial write-offs:

1. If this is a partial write-off where the customer will still owe a remaining balance:

  • Follow the steps above, but for the Amt Posted for the invoice(s), enter only the amounts each invoice's balance will be reduced by.

  • The negative Amt Posted for the GL Account still has to equal the total partial write-off amount(s) posted for the invoice(s).

2. If this is a partial write-off where Cash Receipts Entry is being used to record partial payment, and the remainder will be written off:

  •  Follow the steps above, but enter what is received in the Cash Deposit Amount of the Cash Receipts Deposit window, and into the Amount Received field of the Cash Receipts Entry, Header tab.

  • For the Amt Posted for the invoice(s), enter the amounts each invoice's balance will be reduced by from both the cash received and the write-off.

  • The negative Amt Posted for the GL Account, should equal only the total to be written off. (The rest is posted to the Cash account as money received/deposited.)

General Ledger posting result (after update of the Cash Receipts Journal and Daily Transaction Register):

  • The GL Account entered for the write-off will be debited.

  • The cash account for any partial cash amount received will be debited.

  • The Accounts Receivable account will be credited.

 

In conclusion, mastering the ability to write off customer invoices or bad debts in Sage 100 Accounts Receivable is an essential skill for effective financial management. This procedure, although it might seem daunting initially, can be simplified by following the step-by-step guide we've provided. Remember, it's all about accuracy and efficiency in keeping your financial records.

Should you have further questions or need support in managing your Sage 100 Accounts Receivable or other financial matters, don't hesitate to reach out to us. Our team of experts is ready and eager to assist you in navigating your financial challenges and helping you maximize your business's potential. Your financial health is our utmost priority, and we're here to support your journey every step of the way.

Doug Clark