Accounting for Bad Debts

In any business, customer is king. When an invoice
is sent out to our customers, we always predict that the customer is
going to pay us back. There are times when we know that the payment
isn’t going to come through, like when the customer goes out of
business or has a rough patch.
It is a good practice to write off the amount due, when it is unlikely that customer is going to pay us back. Hence, we included “Write Off” to Zoho Books and Zoho Invoice recently. 

process behind writing off an invoice is simple. Let’s see how this
works with an example. Consider that Mark, your customer has an
outstanding balance of $500 from a single invoice. Mark has gone out of
business and he’s told you he wouldn’t be able to pay up. Your reports
keep including the balance due from Mark on all important reports.

all you do is simply go to the “Invoice Details” page and click the
Write Off option. Once the invoice is written off, the balance due for
Mark shows up as $0 and your reports give you the actual figures.
Besides this, when
an invoice is written off, the amount is
recorded as an expense. Hence your profit and loss figures are accurate
and you wouldn’t need to go through the rigmarole of transferring
balances etc

In Zoho Books, the amount written off from an invoice is added on to the Bad Debts account.

is a neat little way to deal with bad debts, which we hope our customers must seldom use.
We will be back with loads of product updates in the coming weeks.
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9 Replies to Accounting for Bad Debts

  1. I also do not see that the write-off is being taken as an expense in any period. Perhaps this is not working unless one uses Zoho Books??? An answer is needed!

  2. In Zoho Invoice it seems that when you use Write Off feature it doesn't reduce your tax liability. Does this mean that Credit is a better option?

  3. We are using ZOHO Invoice. How do I see what amounts have been written off?? Is there a special report because I cannot find one?

  4. I am pleased to work with such a fine group of People that care about the end product. They don't stop working and just collect our payments they keep working to make better products and I just wonder what we will see in a year or two!

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