How to Write Off Bad Debt in Sage 100

Understanding Bad Debt Write-offs in Sage 100

Bad debt write-offs in Sage 100 can be handled primarily through the Cash Receipts Entry method, which is the most straightforward approach. This process allows you to write off either entire invoices or partial amounts while maintaining accurate financial records and proper audit trails.

Complete Invoice Write-off Process

Initial Setup

Before beginning the write-off process, ensure you have the following information ready:

• The invoice number(s) to be written off
• The appropriate general ledger account for bad debt expense
• Necessary authorization for the write-off
• The correct bank code for the transaction

Step-by-Step Process

1. Accessing Cash Receipts Entry Navigate to the Accounts Receivable menu and select Cash Receipts Entry. If your system uses batch processing, you'll need to create a new batch first.
2. Creating the Deposit Entry In the Cash Receipts Deposit Entry window:

• Enter the appropriate Bank Code
• Input the current Deposit Date
• Specify the Deposit Number
• Enter 0.00 in the Deposit Amount field for complete write-offs

3. Customer Information Entry In the main Cash Receipts Entry window:

• Enter the Customer Number
• Type "Bad Debt" in the Check No. field
• Verify the Amount Received shows 0.00
• Navigate to the Lines tab

4. Invoice Details On the Lines tab:

• Enter the invoice number to be written off
• Input the full invoice amount in the Amt Posted field
• Move to the next line
• Change the LINE TYPE to G/L Account
• Enter the bad debt expense G/L account number
• Input the write-off amount as a negative number

5. Finalizing the Write-off

• Verify that both the posting balance and Total Posted fields show zero
• Click Accept to save the entry
• Print and update the Cash Receipts Journal

Partial Write-off Procedures

When Customer Will Maintain a Balance

1. Initial Setup Follow the same initial steps as a complete write-off, but with these modifications:

• Enter the actual amount received in the Deposit Amount field
• Ensure the Amount Received field reflects the partial payment

2. Transaction Entry In the Lines tab:

• Enter the invoice number
• Input the partial amount to be written off as a positive number
• Create a new line with G/L Account as the LINE TYPE
• Enter the bad debt expense account
• Input the write-off amount as a negative number

Partial Payment with Remaining Write-off

When handling a situation where you receive partial payment and need to write off the remainder:

• Enter the full invoice balance amount in the Amount Posted field
• Create a new line with G/L Account as the LINE TYPE
• Enter the bad debt expense account number
• Input the write-off amount as a negative value

General Ledger Impact

The write-off process affects several accounts in your general ledger:

Debit Entries:

• Bad Debt Expense Account (for the written-off amount)
• Cash Account (for any partial payments received)

Credit Entry:

• Accounts Receivable Account (for the total amount)

Best Practices and Considerations

Documentation Requirements

Maintain proper documentation for all write-offs, including:

• Authorization from appropriate management
• Attempts to collect the debt
• Correspondence with the customer
• Reason for the write-off

Timing Considerations

Consider these factors when timing your write-offs:

• Fiscal year-end implications
• Tax reporting requirements
• Company policies regarding aging accounts
• Collection attempt documentation

Internal Controls

Implement these controls for write-off procedures:

• Establish approval hierarchies based on write-off amounts
• Create a documented write-off policy
• Maintain separation of duties
• Regular reconciliation of write-off accounts

Reporting and Analysis

Available Reports

Sage 100 provides several reports to track and analyze bad debt write-offs:

• Cash Receipts Journal
• Daily Transaction Register
• General Ledger Detail Reports
• Accounts Receivable Aging Reports

Monitoring and Review

Establish a regular review process to:

• Track write-off trends
• Identify potential collection issues
• Adjust credit policies if needed
• Monitor customer payment patterns

Troubleshooting Common Issues

Balance Verification

Always ensure that:

• The posting balance equals zero
• All entries are properly dated
• G/L accounts are valid
• Customer numbers are correct

System Requirements

Verify that:

• User permissions are properly set
• The correct fiscal period is open
• Required modules are properly integrated
• System updates are current

Conclusion

Writing off bad debt in Sage 100 requires attention to detail and proper procedure following. The system provides a robust framework for managing these write-offs while maintaining accurate financial records. Regular monitoring and proper documentation ensure that your company's financial statements accurately reflect the status of accounts receivable and bad debt expenses.

Remember that while the technical process is straightforward, the decision to write off debt should always be made in accordance with company policies and generally accepted accounting principles. Regular review of write-off procedures and their impact on financial statements will help maintain the integrity of your accounting records and support sound financial management practices.

Citations: [1] https://www.dwdtechgroup.com/sage-100-mas-90-200/90850/ [2] https://www.ardentconsultingllc.com/resources/how-to-write-off-invoice-bad-debt-sage-100-accounts-receivable