How do I deal with customer non-payment?

[Maf. King]

On Thursday 03 December 2009 18:49:22 Heather J. Daley wrote:
> On Thu, 3 Dec 2009, Maf. King wrote:
> > On Thursday 03 December 2009 00:40:24 Heather Daley wrote:
> >> I have a customer who has paid part of an invoice but is not going to
> >> pay the rest.  How do I account for that "lost" income?
> >

Hi,

I tend to edit the original invoice and put a negative sum in to the price 
column.  As long as the overall invoice is positive, GC handles it fine.  If 
not, then I'll carry forward (manually) to a future invoice. Think of it as 
re-negotiating your price.

> > Hi Heather,
> >
> > 2 ways - you could issue a credit note to the customer and reduce Income
> > (probably the best way, since you are getting part-payment),
>
> How do I do that in gnucash?  What is the other side of the double entry
> when I reduce the income?
>
> > or
> > you could allocate the "lost" bit to Expenses:Bad Debt (although that is
> > more for when customers go bankrupt and don't pay any of the invoice)
>
> This brings up a related issue.  This customer also has another unpaid
> invoice, which I simply unposted and rendered inactive because the whole
> thing was going to be ignored.  Is it better to keep it posted and offset
> the entry with Ex:Bad Debt?  What do I then do at tax time?  The invoice
> was for services only, if that makes a difference.
>
> Or is this the kind of question to ask an accountant?  At first I was just
> asking how to do it in gnucash, but it now seems like it's more
> complicated than that.
>

Yea, I'd advise that you ask a professional who knows your local tax and 
accounting rules. As I understand the UK rules, it should be included as an 
expense, which cancels the income and hence has the same effect of profit as 
your approach....


Maf.

> > HTH, and IANAA
> >
> > Maf.