Write Down Adjustment
Writing down debt is very different from writing off debt. When you write down debt, you are removing the receivable with no expectation of it being paid. For example, most organizations write down small debit and credit balances as part of their write-off process (e.g., they don't send a very small amount to a collection agency).
Let's run through an example to illustrate this:
Event
GL Accounting
Tax Payable Balance
Tax Holding Balance
SA's Payoff Balance
Bill segment created
A/R 110
Revenue <100>
Tax Holding <10>
0
(10)
110
Payment received
Cash 109.50
A/R <109.50>
Tax Holding 9.95
Tax Payable <9.95>
(9.95)
.05
0.50
Write down cash accounting debt
Tax Holding 0.05
Write Down Expense 0.45
A/R <0.50>
(9.95)
0
0
In order to achieve the above, you must set up an adjustment type that references a special financial transaction algorithm (refer to non-accrual accounting write down algorithms ADJT-AD and C1-FTGL-AD for more information). This algorithm will reduce or increase the receivable balance accordingly AND cause any holding amounts to be set to zero. This adjustment type should be referenced on your write-down algorithm that is referenced on your write-off controls.