Write off debt

There may be occasions when a customer never pays you, for example, if the company has ceased trading. In these cases, you will have to update the transactions to indicate that the debt will not be paid – this is known as writing off the debt.

You need to decide how long you will wait before you write off what a customer owes you.

Once you have reached or exceeded the bad debt waiting period, specified by current legislation, you can write off the debt and reclaim the VAT. (This waiting period was 6 months, as of July 2009.) This is set in the Sales Ledger settings Customer Defaults tab.

You can write off the debt in two stages in Sage 200 Accounts. You can:

Make provision for the bad debt.

This allows you to adjust your profit and loss account before the debt is old enough to reclaim the VAT.

For information about provision for bad debt on foreign currency transactions, see the help topic, Provide for bad debt on foreign currency transactions.
Write off the bad debt.

This allows you to write off the debt and reclaim the VAT.

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