This article will help walk you through writing off older invoices to clear them from Accounts Receivable.
NOTE: It is advised to follow these steps especially if the item has sales tax that needs to be credited for sales tax reporting.
Step 1:
Create Credit Item for Invoiced Item
- Select Items
- Select Edit to view the Item you want to create a credit for
- Select the Create Credit Invoice link
- “Credit” will automatically be added in the beginning of the description
- This will cause Purchase and Selling Amounts to be a negative (credit)
- Manually change any "Other Costs" to negative
- If you need to add restocking fees, add to "Other Costs" as a positive amount (this will reduce the credit amount)
- Change the component number to the next item in sequence
- Select Save
- Confirm that the amounts of the credit items = the original items (less any restocking fees or changes in freight, etc.
- Add Invoice number of the original item. Save and close.
Step 2: Reapply Credit to Balance Item to clear from AR
A. Put the credit from credit item back into Funds Available.
- In the Money In screen, change the Payment Method to Apply Payment to Items from Funds Available.
- Scroll to the bottom half of the screen. (Do not enter a dollar amount in the Amount field of the red #2 area, but you can adjust the date and description as you like.)
- Filter for Invoice # and enter the negative amount in the Amount to Apply field on the item you want to remove the credit from.
- If you do not see the item, change the "Filter" from Item Balance to All.
- Click Post Payment.
B. Apply Payment to Items from Funds Available to the item with the balance
- Filter for Invoice # and enter a positive amount in the Amount to Apply field on the balance item you want to apply the money to.
- Click Post Payment.
If no sales tax was involved- they can follow these easy steps
- Post a receipt (use Receive & Apply method), just like you would if the client was actually paying you.
- Change the Cash Account to something like “Bad Debt”.
These accounts do not exist in Studio Designer by default. You may need to create.