[GNC] Bad Debt Recording

[David Cousens]

I think you would have to link the writeoff transaction to the invoice
in the same manner you link a payment if GnuCash will allow you too do
that (I don't know for sure if it will- Derek may be able to confirm
whether it can be). That should clear the invoice

I would not see why it you would want to necessarily remove the bad
debt from the client report - they still owe you the money, it is just
your judgement that you are never going to receive it.  Too many bad
debts to the one client and you would want to look at not extending
credit to them. 

If you ever did receive it, then you would have to do an adjustment
cancelling the bad debt write off and carrying forward the debt into
the period in which it is paid (bit messy to do).

David

On Fri, 2024-08-16 at 09:29 +1000, Jeff wrote:
> Thanks David,
> That is a clearer description of what I am doing.
> The issue that I have, and maybe it is just my lack of general 
> accounting knowledge, but the amount ($300) is still showing as owing
> from Bob if I either run the Client Report, or open the Invoice.
> 
> Shouldn't a written off debt effective remove that debt, so when you 
> look a that client is shows they owe nothing?
> 
> This is the bit that I seem to be missing, or misunderstanding. 
> Essentially how do I link it to that specific client?
> 
> Regards,
> Jeff.
> 
> On 16/8/24 09:17, David Cousens wrote:
> > Jeff,
> > 
> > The standard direct write off method for bad debts would be to
> > credit
> > the Accounts Receivable for the amount of the bad debt and debit an
> > Expense:Bad Debts account for that amount. That will remove the bad
> > debt from your Accounts receivable and record it as an expense
> > against
> > the business as you suggested.
> > 
> > There are more complex allowance methods where your business has a
> > fraction of bad debts regularly and you are required to use accrual
> > accounting.
> > 
> > David Cousens
> > 
> > 
> > On Fri, 2024-08-16 at 08:53 +1000, Jeff wrote:
> > > Hi list,
> > > 
> > > Looking for some advice in recording (writing off) some bad debts
> > > in
> > > GnuCash when using the Business Invoice/Bills feature.
> > > 
> > > Example:
> > > Have Client Bob who owes (has been send and Invoice) for $1000.
> > > Bob are disputing the full amount and have only paid $700.
> > > 
> > > In GnuCash I open the Invoice and record a payment of $700.  This
> > > leaves
> > > Bob owing $300.
> > > 
> > > I can record a $300 amount going into Expenses -> Bad Debts, from
> > > the
> > > Accounts Receivable going directly via the Account page.
> > > 
> > > I think that this then effectively wipes out the debt.  (This may
> > > be
> > > completely wrong)
> > > 
> > > My issue is Bob still shows as owing $300.  I, maybe incorrectly,
> > > assumed it would effectively show as Bob owes nothing as we have
> > > forgiven the amount owed.
> > > 
> > > What step am I missing?
> > > Can it be done through the Invoice screen to essentially "pay"
> > > the
> > > invoice?  The Payment side of the Invoice only seems to show
> > > "Assets"
> > > accounts (as expected).
> > > 
> > > Regards,
> > > Jeff.
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