Bad Debt is regarded as an Expense in die books of an Asset Group and will therefore be reflected as such on the Income Statement of an Asset Group.
Provision will be made for a Bad Debt category on the Expense Account and Bad Debt journals will be shown in a separate column on the Rent Roll to make it easy to see where and against which categories Bad Debt was written off.
This feature is also available on all Tenant accounts from the Options menu.
How to Write Off Bad Debt
The Bad Debt feature can be accessed from the Options dropdown menu on any Tenant Account as shown below: When you select the option, the system will compile a list of draft journal transactions based on the outstanding category balances on the account and display them as shown on the screen below:
With reference to the screen above you can :
Customize the amount to be written off :
Default is the full category balance
Note that this amount is the full amount inclusive of the VAT component if applicable
Specify the VAT where applicable by selecting the VAT Type from :
No VAT / Standard Vat / Custom Vat
If you select Custom VAT, you can specify the VAT amount that is included in the Amount to be written off
Select the transactions to post to the account by using the tick marks (green correction icon or red cross icon)
Then, click on the Write-off button to post all the selected transactions on the account
You can also use the blue arrow icon on every draft transaction to post any single transaction to the account instead of in bulk with the Write-off button
What will happen when you select to use this feature to write off bad debt?
Impact on Tenant Account
The draft journals that have been approved will be posted to the Tenant Account and the associated category balances will be updated. If the full balance of a category was written off, the category balance will now be zero. If all category balances were written off in full, the Tenant Account balance should also be zero
Note that the full written off amount (including VAT where applicable) will be used as the transaction amount
The Tenant Account Statement (normal format) will reflect the journals once they have been written to the account
The Tenant Account Statement (consolidated format) will reflect the journals once the next consolidation is done to compile statements
Impact on Landlord Income Due Account
Bad Debt Journals written to the Tenant Account against categories that affect the Landlord Income Due or Debtors account (Rent and Recoveries) will also result in a credit journal against the corresponding category on the Landlord Income Due account
Note that the full written off amount (including VAT where applicable) will be used as the transaction amount
The Landlord Statement will NOT reflect the journal once it has been made, although the correction will appear on the Landlord Income Due account on the system itself.
Impact on Asset Group Accounts
If an Asset belongs to an Asset Group with full accounting enabled and if this is the first time Bad Debt is written off for the Asset Group, the system will automatically add the Bad Debt category to the Asset Group Expense Account.
The system will then also make the corresponding debit journal entry against the bad debt category of the Asset Group Expense Account for the double entry. Note that only the Amount Portion of the original Tenant Transaction (excluding any VAT if applicable) will be used for the journal against the Expense Account.
Where VAT is applicable, the system will also make the corresponding debit journal entry against the Input VAT category of the Asset Group VAT Control Account to complete the double entry. Note that only the VAT portion of the original tenant transaction will be used for this journal.
The journals will reflect against the bad debt category on all statements where expenses are shown. For example, the Trial Balance and Income Statement.
Bad Debt journals will be shown as a separate column on the Excel export version of the Rent Roll report so that the amounts written off can be seen against the relevant categories against which they were written off. Note that the PDF version of the Rent Roll will not be changed and any bad debt journals will still be subtracted from the total billing column on the Rent Roll.
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