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.