About the Bad Debt Write-Off Payment Type

When a customer fails to make payment for an order that was placed on credit, an organization must record the bad debt. From an accounting perspective, the Bad Debt GL account recognizes uncollected receivables in which no expense is recognized until individual accounts are determined to be worthless. At that point the account receivable is written off with an offsetting debit to uncollected accounts expense. See Processing Payments for information on Payments.

When you select the Bad Debt payment type, the payment information area displays the following fields (which are the same fields that appear for a Purchase Order):

  • PO # (required): Enter a reference number or other information regarding the write-off in this field. It is required to save the write-off.
  • Terms: This field is for reference purposes only. If desired, enter the original terms for the expected payment of the order that was never received.
  • Due Date: This field is for reference purposes only. If desired, enter the date by which the payment was originally due.

When specifying a bad debt write-off, complete the PO # field and any of the other fields required by your organization's business rules.

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