How to handle a "will not pay" invoice in gnucash?

[Julie Cliffe]

Hi Geert,Sorry to be so long replying (it was a busy month), but I finally got to trying this and wanted to let you know this worked a charm:  my invoice is now marked as paid and I don't show any prepayments for this customer.
The only deviation from what you said would happen was at step 3, where there were 2 LotLink transactions in addition to the payment (not 1).  All my account balances still look good, so I guess that's OK.
With that, I'll take your advice and hop off to upgrade to 2.6.11.
Thanks for your help!
Cheers,Julie

 

    On Friday, January 8, 2016 3:31 AM, Geert Janssens <geert.gnucash at kobaltwit.be> wrote:
 

 #yiv9123460028 p, #yiv9123460028 li {white-space:pre-wrap;}On Sunday 03 January 2016 17:40:32 Julie Cliffe wrote:> Hi,> I'm using the business features of GnuCash (2.6.3) to invoice and> track payments of customers.  One customer with whom I do a lot of> business has indicated that they will not pay one of their invoices> (sigh).  My accountant told me to transfer the A/R amount to Expenses> (Bad Debt).  What's the best way to do this? Having asked that> question, it might be too late and I might actually need some kind of> retro-fix advice.  I tried to deal with this a while back and I can't> recall exactly what I did, but now I have the following entries:> BadDebt    dr    x.xx>     A/R            cr        x.xx> and 2 LotLink transactions, 1 dr and 1 cr.  The Type of the BadDebt> transaction in the A/R account is "?".> > On the books, everything looks OK:  there's a BadDebt expense,> everything is balanced, and the invoice is no longer in the list of> open invoices.  However, there's a straggling "Prepayment" item in my> list of invoices for that customer that I'd rather not look at.  Can> I make that go away somehow? And, for future reference, can you> suggest how this should have been done in the first place?> Thanks,Julie>  Hi Julie, For this kind of transaction, only one lotlink transaction should suffice. It's likely you made several attempts in handling your bad debt which confused gnucash. As for the proper way to do this in general - theoretically, you would process a payment for the invoice to a "BadDebt" account. Such an account would be an expense account. And this is where it gets a bit complicated in GnuCash: you can't process a payment for an invoice directly to an expense account. So it takes two steps:1. pay the invoice to an asset or liability account2. move the asset or liability split from the payment transaction to the BadDebt expense account. In your specific situation this becomes:1. remove the two lotlink transactions and any related transactions (that is: payments), including the transaction between your BadDebt and A/R. If all is well, your "Process Payment" window for this customer should list the invoice the customer won't pay, and no prepayments. 2. Then pay your invoice to an arbitrary asset or liability account. It can be your checkings account even. We will fix that in the next step. 3. Open the account register for your A/R account. For this invoice there should now be one lotlink transaction and one payment transaction. 4. Select the payment transaction and change the transfer account to be your "BadDebt" account. Make sure to leave the transaction (eg by clicking on another transaction) to save the changes. 5. If all is well, your "Process Payment" window should still be clean: no pre-payments, and the bad debt invoice gone. Let me know (via the list) how it worked out. One last remark: your version of gnucash is still making extensive use of lotlinks. This comes with its own set of subtle issues (like the prepayment you ended up with). I would suggest you upgrade to at least version 2.6.6, which fixes a lot of these small problems. Once upgraded, please run "Check & Repair" on your A/R and A/P accounts to clean up most of the lotlink legacy. Don't forget to make a backup just in case... Regards, Geert