[GNC] Posting a bad debt

[Adrien Monteleone]

Roger,

You could create a sub-account of A/R something like ‘B2BTrade'. When the client does work for you, you ‘pay’ the bill they send you by crediting the asset, and debiting the relevant expense. When you want to apply this to their A/R balance, then ‘pay’ their invoice from you using that account. You can use a single sub-account or keep separate ones for each business you trade with. You could instead place that account in Liabilities if you prefer. The advantage to making it a sub-account of A/R is to have a roll-up total reflect what is actually owed to you without having to do the math yourself with the liability section. The single account is certainly easier, especially if you don’t do frequent and regular business this way. And if you want to see a B2BTrade balance for any one entity, you can run a report filtering on the Payee Description or Notes/Memos, however you annotated the transaction.

So no need to issue credit memos in this case. Just pay their bill to you with a Trade asset account and then pay your bill to them with that same account. The business features will make the debits and credit work out properly.

Regards,
Adrien

> On Apr 9, 2019, at 6:45 PM, <rmomxtx at gmail.com> <rmomxtx at gmail.com> wrote:
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> Greg,
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> When you create an invoice or a credit memo, in the main body of the form where you enter what you are going to sell, the available accounts are asset, liability and income. Still no access to an expense account to charge off bad debts. I face the same problem when a parent wants to pay his child’s tuition in kind, i.e. by services I would otherwise pay for. I would like to show the credit memo as an expense for the service provided but there is no way to do that. I bought a hefty switch for our internal network that way. The family has a nice credit balance and it didn’t touch my cash flow. I added a fixed asset account for the switch and charged the credit note to that account. That would not work for other services, like painting and computer maintenance, 
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> The only way I’ve been able to make it work is to create a bad debt income account that will show a negative balance and then move the transaction out of the income account journal to a bad debt expense account by a separate manual transaction outside the invoice module. Seems a bit more convoluted than it needs to be. I have to read my notes on what I decided to do every time I need to do it. Isn’t that often so it isn’t that big a deal but it would be nice to have at least an option to charge off bad debts to a bad debt expense account. The totals come out the same either way and a CPA may tell me that it indeed should be an income account. Just seems like it should be an expense account. Would also be useful to pay for services in kind this way. Came to mind this week because I have a pretty hefty account to write off. 
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> You need to do something through the invoice module or the unpaid invoice just hangs there and shows up on your balances. You can’t just do a journal entry in the accounts receivable journal. I think once or twice I just gave up and unposted the invoice, changed the name of the customer to an account I use to save these as you can’t delete them, z Recibo Abierto (open receipt – my system is in Spanish), delete the charges and that makes it go away too but there is no record that Joe Dokes is a non-paying customer and it created a loss. Just drops your accrued income. Same net effect so it is an option. 
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> Thanks,
> 
> Roger