Write-Offs
At write-off time we may refund credit balances. The refunding of credit balances is handled by A/P adjustments and these have cash accounting processing as described under Cash Refunds.
If we have to write-off debt, holding balances are relieved in proportion to the amount of debt that is written off (as usual). It's important to understand that for this to work, you must set up the system as follows:
- The tax holding distribution codes must have their override distribution switch turned on.
- The distribution code on the SA type associated with the service agreement to which the written-off payables are transferred must be the REAL payable distribution codes. This is important so that if the customer pays after the payables are reversed, we will be able to debit cash and credit the REAL payable distribution code.
Let's run through an example to illustrate this.
|
Event |
Normal SA GL Accounting |
Write Off Revenue SA GL Accounting |
Reverse Liabilities SA GL Accounting |
|
Bill segment created |
A/R 110 Revenue <100> Tax Holding <10> |
||
|
Write Off Time |
|||
|
Reverse the held payables |
Xfer 10 A/R <10> |
Tax Holding 10 Xfer <10> Note, the tax holding only gets debited if you have turned on the override at write-off switch on its distribution code |
|
|
Write off revenue |
Xfer 100 A/R <100> |
Write Off Expense 100 Xfer <100> |
|
|
If the customer subsequently pays |
Cash 100 Write Off Exp <100> |
Cash 10 Tax Payable <10> Note, the tax payable only gets credited if the SA type's distribution code has been defined as such |