Finance and Accounting · Daily operations · 8 min read

Write off balances and manage disputes

Request, approve, reverse and recover write-offs, and record disputes so contested amounts are not chased or paid.

Before you begin

• The invoice or bill is posted, in the company currency, and has an amount outstanding. Foreign-currency items are written off from the payment screen.
• Permissions: payment.record to request, cancel your own request, recover and manage disputes; journal.approve to approve or refuse; journal.reverse to reverse; account.manage to set tolerances.
• Tolerances are set once under Tolerances on the write-offs screen.

Set the tolerances

1. Open Finance > Receivables > Write-offs (or Payables > Write-offs) and open Tolerances.
2. For each kind (Small balance, Bad debt, Vendor difference, Exchange residual) set the Cap amount and Cap % of bill (leave empty for none), Posts without approval up to (not above the cap), whether a Reason is required, the Write-off account and the Recovery income account.
3. Press Save.

If no tolerances are set, every write-off needs approval and nothing is capped.

Request a write-off

1. Press New write-off.
2. Choose the Kind. Bad debt applies to customers only; Vendor difference to suppliers only.
3. Choose the Invoice / Bill and enter the Amount and Date (not before the document date).
4. Enter the Reason where required. Optionally choose the Write-off account.
5. Save the request.

An amount at or under the "posts without approval" limit, for a kind that allows it, posts at once. Anything larger waits as Requested. A bad debt always waits.

Worked example. Cap AED 50.00, 1% of the bill and auto-post up to AED 10.00. An AED 8.00 small balance posts at once: debit write-off expense 8.00, credit receivable 8.00. An AED 25.00 request waits. On an AED 1,200.00 invoice, AED 15.00 is refused because the 1% cap is AED 12.00.

Decide

1. A different person with journal.approve opens the request and presses Approve or Refuse (a reason is required to refuse). Nobody approves their own request.
2. On approval the entry posts and the status becomes Posted.
3. The requester can Cancel their own request; others need approver rights.

Reverse or recover

• Reverse: a posted write-off can be reversed with a reason by a journal.reverse holder. The invoice is open again.
• Record a recovery: for a posted customer write-off, enter the amount, the account it was Received into and the date. The entry debits the bank and credits recovery income. The invoice stays cleared. You cannot recover more than is still to recover. A recovery can itself be reversed.

Record a dispute

1. Open Finance > Receivables > Disputes (or Payables) and press New dispute.
2. Choose the Invoice / Bill, enter the Amount in dispute (not more than outstanding), the Reason, an Owner and an Expected resolution date that is not in the past.
3. Save. The disputed amount is left out of dunning notices and payment proposals; the rest is still chased.
4. When settled, press Resolve and say how, or Cancel and say why.

A document can have only one open dispute.

What happens next

Posted write-offs reduce the receivable or payable and the aging. Disputes show on the collections worklist and on Payment due.

Good to know

• Two requests together cannot exceed the balance outstanding.
• If the invoice was paid down after the request, approval is refused because it now owes less.
• If someone else changed a record while you had it open, you are told to reload it.
• Related: Collections and dunning.