About write-off setup

To use the write-off functionality, you perform the following steps:

1. You configure the general ledger accounts and subaccounts to be used for writing off expenses by using the Chart of accounts (GL202500) window as follows:
   • For the direct write-off method, you configure an expense account (for instance, the Balance write-off account) and subaccounts (if needed).
   • For the allowance method, you configure a contra asset account to accounts receivable (for instance, Allowance for doubtful accounts) and an expense account (for example, Bad debts expense) and subaccounts (if needed).
2. In the Reason codes (CS211000) window, you configure reason codes that point to the general ledger accounts you have configured in Step 1:
   • For the direct write-off method, you create a reason code that points to the expense account and subaccount to be used for writing off expenses. You can configure different reason codes to distribute write-offs to different accounts or use one reason code for all such expenses.
   • For the allowance method, you create a reason code that points to the contra asset account (Allowance for doubtful accounts) and subaccount. Then you write off bad debts by using this reason code directly from an invoice and make the entries manually for the contra asset account in the Journal transactions (GL301000) window.

   For details, see Add a reason code.

3. You enable write-off functionality for a group of customer accounts by using the Customer classes (AR201000) window or individually for a customer account by using the Customers (AR303000)window. For details, see Enable or disable write-offs.

After configuration is done, you can:

• Write off balances directly from an invoice when you apply a payment to it by using the Customer payments (AR302000) window.
• Write off balances or credits of several documents at once by using the Write-off balances and credits (AR505000) window.
• Write off balances directly from an invoice when you apply a payment (created to match a bank transaction) to it by using the Process bank transactions (CA306000) window.

By using the Customer ledger preferences (AR101000) window, you can specify the reason codes to be used by default for writing off credits and balances. The system will fill in the reason codes specified here in the Reason code field in the Write-off balances and credits (AR505000) window, as well as in the Customer payments (AR302000) window, when you select the type of write-off operation.