Hi, i’ve been having issues with a client who hadn’t paid their account in 5 months, i started another invoice for late payment charges (including compensation under section 5b of late payment of commercial debts) and another for the cost of starting a small claims procedure, eventually the client offered an amount in full settlement which is lower than the original invoice, i accepted that amount in settlement as i didn’t think he’d end up paying anything.
My question is how do i log this lesser payment against all 3 invoices and how do i write off the rest as a bad debt leaving the client account clear?
In QuickFile any lump sum payments are allocated in full and in sequence from the earliest to the most recent invoices. You can lodge partial amounts but you would need to split up the amounts on the bank first to do this, you can also apply bad debts against each invoice, but only if the issue date is more than 6 months old.
To make things simpler I would just apply a negative line to each invoice and then fully pay them at the new balance. If the invoices reside within a locked period you could issue a credit note instead.
Thanks for the reply, my only issue is that for some of these invoices a portion will be a bad debt, shouldn’t I show that in my accounts? or should I simply amend the invoices to match the amount given and leave it at that?
You can allocate the credit in full to the first two invoices and leave the last issued invoice part paid, you could then apply the bad debt to the remaining balance on this part-paid invoice. Bad debts do differ slightly to just writing down the original invoice value as they get posted as an overhead on the P&L, rather than just reducing the sales amount.
