You may sometimes find yourself in a situation where you will not be paying the remainder of a purchase or a whole purchase.  You will need to write this off as bad debt so that it is still accounted for correctly.

Creating the bad debt code

The first step is to set up an outgoing type called ‘bad debt’.  This can be done by going to Purchases-> Outgoing Types, then you will need to add a new code towards the bottom of this page by entering in the empty field and pressing Add.

Purchase that will never be paid

You will need to go to Purchases and then search for the purchase that will never be paid.  On this purchase you will need to scroll to the bottom and press copy.  You should now have an exact copy of the purchase.  You need to press Edit on the line item and change the outgoing type to your new code, ‘bad debt.’.  Also put a ‘-‘ in front of the Rate.  All that is left to do is return to the original purchase and go to the Payment Details to apply the credit note you just created.  To do this press Apply Advance Payment then select the credit note you just created.

Writing a remainder of a Purchase off

The first thing you need to do is ensure that the amount you have paid to the supplier has been recorded on the purchase, you should then have an outstanding amount.  Now you need to go to Purchases-> New Receipt to create a new receipt for that supplier.  You need to add a line item to this receipt assigned to the ‘bad debt’ outgoing type, then set the amount to the same amount that won’t be paid.  You may want to put a note in the description box like ‘bad debt write off.’  All that is left to do is return to the original purchase and go to the Payment Details to apply the credit note you just created.  To do this press Apply Advance Payment then select the credit note you just created.  This Purchase has now been recorded with the paid amount and the amount that will not be paid.