Are you searching out ways to write off bad debts in your Sage 50 accounting software application yourself, but don’t know to initiate? We can help you with the writing off client bill of lading to bad debts.
How to write off a bad debt in Sage 50 accounting software application?
There are occasions when the business owners often have to deal with the clients who are not able to reimburse their invoices. Let’s say as a result of unexpected shutting down of business, bankruptcy or some sort of major dispute between the business partners.
However, you can show these invoices in your balance sheet as a written off bad debt. Besides, you have to log the bad debt written off in your Sage books.
Here are some of the simple steps that you can follow to write off a bad debt in the Sage 50 accounts:
Bad Debt Respitestate of affairs
As per the rules of the HMRC, you are entitled to request back VAT only and only under the mentioned below scenarios, including:
- When you have previously reckoned for the VAT on the deliveries and made payment of it to HMRC.
- When you have posted the irrecoverable debt in theeveryday VAT books and moved it to different bad debt books.
- When the debt has been outstanding for a durationof approximately 6 monthslater the periodexpense is in arrears and billed or, if afterwards, 6 months subsequent to the day of the delivery.
How to generate a nominal code for a bad debt writing off?
In case, you are making use of the Sage default nominal arrangement then you don’t require the nominal code as you will be already assigned one for Bad Debt Write Off,. On the other hand, you have by mistake removed this account or generated the nominal arrangement minus a Bad Debt Write Off nominal code then you have to generate one before you come to a decision to proceed further. To do so, you have to perform given steps:
- Navigate to the Nominal code option > choose the New/Edit option from the pull-down list.
- Now, you have to finish the Nominal log as per the instructions. For your reference, you have to provide the nominal code digit that you would like to use for writing off a bad debt.
Note: Please bear in mind that the nominal code number that you choose should be in the range of the expenditures section in your profit and loss statement.
- Hit the Save button > Click on Close
How to write off a sales bill?
To write off a sales bill, you have to proceed with given steps:
- First of all, you have to navigate to Customers option > here you have look for Batch credit
- When you find the Batch credit option, you have to provide the appropriate information on the Batch Customer Credits dialog box.
- Once you are done, hit the Save button and click on the Close tab to exit from the opened dialog box. Now, you are good to go.
After this, you are done with the writing off a sales bill and have to apportion the credit to the bill to settle the unsettled debt. Afterwards, you have to get back VAT. For which you have to proceed with the next section.
How to get back VAT provided the written off amount for bad debts respite gets approved at a previous date?
To get back the VAT, you have to perform the given steps:
- First of all, you have to navigate to Customers option > here you have look for Journal entry section
- When you find the Journal entry section, just provide a date and allusion to the journal.
- After that, fill in the details to get back the VAT.
- Hit the Save button and Click on the Close tab to exit from the opened window.