Tally has several features to help you manage debts and bad debts.  These features include bad debt management that lets your write off the money owed, reminder letters, debt collection and automatic credit control.  Bad debts are debts your customers owe you that will never be paid.  Writing off a debt as a bad debt can have implications on your VAT return, for more information please see http://www.hmrc.gov.uk/vat/managing/reclaiming/bad-debts.htm.