Payment Status Modification Method

You can modify the payment status for invoices that are considered bad debts. For this action, you must create a specific payment status code, such as X, for bad debts. To further identify clients with bad debts, you can specify credit message D (bad debts) on the client's Customer Master record.

If you use the payment status modification method and indicate the credit message D on the Customer Master record, you must:

• Modify the data selection for the A/R Open Detail and Summary reports so that invoices identified as bad debts (payment status X) are excluded.

• Create report versions to report on clients who are identified as bad debts.

• Manually enter a reversing journal entry at the end of the month to offset the difference between the A/R Trade Accounts and the Doubtful A/R Trade Account. You can print this information on the Trial Balance report by G/L Offset. Use data selections to include only records with the payment status for bad debts (X).

  Note: The advantage of the Payment Status Modification method is that you can maintain the information in the system relative to the original invoice, and you can easily access and update bad debt information. The disadvantages are that the setup phase is more complex and you are required to make a monthly manual entry. This solution is recommended if you need to keep the original invoice information to process delinquency notices.

After you have made the entries to the A/R trade account as a doubtful account, you must enter an A/R Doubtful Provision.