Companies sometimes have customer entries in Accounts Receivable that need to be cleared from the ledger because they are non-recoverable. This includes transactions such as bad debts, debt forgiveness (e.g. interest charges) and small over/under payments. Often the transactions sit on the ledger for a while because it is troublesome to correct them.
In Sage 300, there are a couple of processes that can be used to clear these items. In situations where there are multiple entries to clear at one time, and where a set of criteria can be defined for doing that, the write-off function may be the answer.
First, review the Accounts Receivable account sets to make sure the Write-Offs General Ledger account is the correct one for each. Write-Offs is the expense account to which amounts are debited when you write off transactions and balances; it is often called ‘bad debt’. The Create Write off Batch screen automatically produces transactions for this account.
Either now or before posting the final results, print the Accounts Receivable Aged Trial Balance for the customers and transaction types used in the Write Off selection process, to use in verifying the results. In this example, the Aged Trial Balance report used is for customer 1200, Ronald Black, and the transactions that will be written off are outstanding transactions on/before 10/31/2019:
Mr. Black’s account has three transactions that will be part of the write-off: a payment and two invoices.
Go to Accounts Receivable Periodic Processing and choose “Create Write-Off Batch”. Complete the screen selections as required to gather the appropriate transactions. The choice for the “type of transaction” to write off include outstanding transactions, overdue transactions, overdue balances, outstanding balances and outstanding retainage. In this example, “outstanding transactions” is chosen.
Choose the Account Type; Ronald Black’s account is Balance Forward, so that is selected.
Choose the document types to include in the process; at least one must be selected. In this example, “all” is chosen, though it could have been limited just the types of transactions outstanding.
Choose either “amount” or “percentage” as the “Select By”, and enter non-zero values in the “From” and “To” fields. When creating a batch to write off small balances, enter a range where the values represent the limits the company wishes to write off. In this example, to include the outstanding cash, which shows as a negative number, the “From” is set to that value, and the “To” to the value of the highest invoice value for the customer. (Note: it is not necessary to use the exact amounts for the range, only that they be set to allow the desired range of documents to be captured).
In the bottom portion of the screen, choose up to 4 different criteria to select the customers who will be included. Leave all as (None) to gather data for all customers who meet the other criteria, or enter the appropriate range. Selections may be done by a number of customer-related variables – use the drop downs to review and choose the criteria required. In this example, only Customer Number 1200 (for Ronald Black) is chosen.
Note that there is an “optional fields” tab. This may be used to further scope the transactions that will be included in the Write-Off batch. This example does not use optional fields so none are selected.
Once all criteria are set, select “Process”. A batch of transactions meeting the criteria is created and posted as an open batch with a description of “Write Off” in the Accounts Receivable Adjustments batch list. Each transaction being written off is a separate entry in the adjustment batch. The batch may be reviewed and transactions edited as needed, and then posted as a normal adjustment batch. If the batch is incorrect, it can be deleted and the process started over.
The following shows one entry from the write-off on Ronald Black’s account:
Written by Mary Clark, Consultant
WAC Solution Partners- New England