Writing Off an Underpayment

You may choose to write off an underpayment because it is not efficient use of your time to chase payment, or your customer is no longer trading. You can write off by:

Creating a sales credit note for a bad debt. This is the preferred way for amounts over £1, and can be used if HMRC is your VAT authority.
Using the Write off feature in the Allocate window.

On the Sales menu, click Ledger.
On the daybook, select a sales receipt for the customer. This the source transaction in the allocation window.
In the toolbar, click Allocate. The Allocate [Document Number] window opens. Sales invoices that have not been fully allocated to will have a positive amount, in the O/S column, displayed in black.
Click the Write Off tab.
To prevent you writing off large amounts, the Max Write-off box can be set with a maximum value. The outstanding amount on the sales receipt must be less than that.
The nominal that the write-off will be posted to can be selected from the Nominal list. Typically you would use a Discounts / Adjustments nominal.
To write off the source transaction, click Current. The note to the right of the button tells you which transaction you are writing off.
To write off a different transaction, select it from the list, then click Selected. The note to the right of the button tells you which transaction you are writing off. If you have just allocated a sales receipt to a sales invoice, the source will be the sales receipt, so you will select the sales invoice that has been underpaid, then click Selected. The Write Off window opens.
Select the date used for the write-off transaction. Select from:
- Write off using the date / year / period of the entry being written off;
- Write off using the current date / year / period;
- Specify: Date / Year / Period.
Then click Continue.
A warning, This transaction contains VAT which will not be reclaimed. Continue with writing this transaction off? is displayed if writing off such an invoice.
The O/S amount will be now be 0.00. Close the Allocate window and refresh the sales ledger daybook. The write-off transaction will be added to the daybook.