[GNC] Posting a bad debt

[rmomxtx at gmail.com]

Adrien,

 

I take it the context of your comments is how to allow for payment of invoices with services in kind. I think I follow you. It is ideal to create a sub account of accounts receivable so the roll up number give a more realistic idea of what you can expect to get paid. Paying for the service from a sub-account of accounts receivable is easy, just a transaction in the journal of one of the two accounts. However, if the asset you create is a sub-account of accounts receivable GnuCash does not give you the option of paying the invoice from any account classified as an account receivable. A liability account is a workable solution. That would work similar to buying the network switch charged to a fixed asset account. When I paid the client’s invoice, I credited the invoice for the full amount he charged me for the switch. Now in the invoice module, the balance in his favor always shows and is charged down as we provide our services in kind. Easy solution for us is to create a liability account for services of this type, pay for the expense from that account and then charge our invoice against the liability. That, GnuCash will allow you to do.

 

Challenge is to remember that’s what you decided to do. I write it down in OneNote so I can refer back to what I decided to do. Otherwise, ties my head in a knot trying to remember what I did and why. 😊

 

Thanks much,

Roger

 

Message: 1

Date: Tue, 9 Apr 2019 19:02:26 -0500

From: Adrien Monteleone <adrien.monteleone at lusfiber.net <mailto:adrien.monteleone at lusfiber.net> >

To: GnuCash <gnucash-user at gnucash.org <mailto:gnucash-user at gnucash.org> >

Subject: Re: [GNC] Posting a bad debt

Message-ID: <486706B7-F07C-4122-9105-B1E66314AB1D at lusfiber.net <mailto:486706B7-F07C-4122-9105-B1E66314AB1D at lusfiber.net> >

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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