Write off small purchase values

Outcomes

If the write off is an invoice	If the write off is a credit note
A credit note is posted to reverse the invoice to be written off, using the original transaction date and the original invoice reference. The value is allocated in full to the invoice.	An invoice is posted to reverse the credit note to be written off using the original credit note date as the transactions date and the original credit note reference. The value is allocated in full to the credit note.
The supplier balance is reduced by the gross value (including VAT if appropriate) of the reversing credit note.	The supplier balance is increased by the gross value (including VAT if appropriate) of the reversing invoice.
Account turnover for this month (or next month if a future period date is entered) is decreased by the net amount (goods value) of the reversing credit note.	Account turnover for this month (or next month if a future period date is entered) is increased by the net amount (goods value) of the reversing invoice.
Bad debt nominal account is debited with the total net value of the write off.	Bad debt nominal account is credited with the total net value of the write off.
Default VAT output account (for the balance sheet) in Nominal Ledger is debited with VAT value on original invoice, except for part allocated transactions, where you amended the VAT amount involved.	Default VAT output account (for the balance sheet) in Nominal Ledger is credited with VAT value on original invoice, except for part allocated transactions, where you amended the VAT amount involved.
Creditors control (for the balance sheet) in the Nominal Ledger is credited with the gross value of the reversing credit note.	Creditors control (for balance sheet) in the Nominal Ledger is debited with the gross value of the reversing credit note.

Note: The central VAT file is not updated.

To write off small purchase values

Open: Purchase Ledger > Adjust Transactions > Write Off Small Amounts.

Choose to write off entries from a single account or from all accounts.
If you want to write off entries from a single account, select the supplier account that you want.

Accept the default nominal account to be used to write off the VAT element of the entry, or select the relevant nominal account from the drop-down list.

If the system is set up to use cost centre breakdown, only the nominal account reference number needs to be specified. The necessary cost centre and department codes are attached automatically from the account header record.

If the system is not set up to use cost centre breakdown, the full nominal account, including cost centre and department codes must be specified.

Example

If your nominal accounts are set up as follows (the first three accounts listed below are set up in default nominal accounts, and the fourth is set up on the supplier account record):
	Default bad debt write off		68100			(profit and loss)
	Default VAT input		15100	ADM	ADM	(balance sheet)
	Creditors control		25100	ADM	ADM	(balance sheet)
	Default nominal account		44100	FAC	STD
and you write off a small value transaction for the following values (using a standard VAT rate set to 17.5%):
	Net	10.00
	VAT	1.75
	Gross	11.75
the nominal posting results will be:
	If cost centre breakdown is not selected
	Bad debt write off	Cr	10.00	68100	FAC	STD
	Default VAT input	Cr		15100	ADM	ADM
	Creditors control	Dr	11.75	25100	ADM	ADM
	If cost centre breakdown is selected
	Bad debt write off	Cr	10.00	68100	FAC	STD
	Default VAT input	Cr	1.75	15100	FAC	STD
	Creditor control	Dr	11.75	25100	FAC	STD
Note: The nominal accounts specified must exist in the Nominal Ledger to prevent postings to the suspense account.

Cost centre breakdown is activated by selecting Accounting System Manager setting Split postings between cost centres for balance sheet accounts on the Operational settings tab.

Enter the transaction analysis code if required.
Accept or amend the maximum value to write off.

Qualifying transactions are displayed for you to select from. If the number of these is too large to be processed efficiently, you are prompted to reduce the maximum value to write off.
From the generated list, select the transactions that you want to write off, using the check box at the left hand side of the transaction.
If the entry is part paid and includes VAT, enter the VAT value to be written off in the VAT column.
Click Write Off to confirm selection of the write offs.

Write off small purchase values

To write off small purchase values

If cost centre breakdown is not selected

If cost centre breakdown is selected