Sales - Bad Debt

Sales - Bad Debt

INTRODUCTION

There may be times when a customer is unable to pay their account and it becomes a bad debt that you want to claim the VAT back.

CREATE A STOCK CODE

The first thing to do is to create a stock called BADDEBT set the stock code as a service item and the VAT Rate to R23, as at time of writing.
This article explains how to create stock codes Create Stock Codes

In the accounting tab set the Sales Account to P80100 which is the bad debt nominal account.
Save the stock code

REFUND

Now you need to calculate the net amount owed by the customer.
Process a standard refund against the customer's account.
Add the BADDEBT stock code and change the price to the amount mentioned earlier.
Process the refund and this will set the value to 0 on the customer's account and update the Bad Debt Nominal.
This then will update the VAT records also.


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