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AR - Customer baddebts write off

Jul 24, 2017 at 03:52 PM


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Former Member

Hi Friends,

Business Requirement:

AR - Customer invoice, All over due amounts (Baddebts) to be write off.

Can you please suggest me the scenarios to write off over due items.

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1 Answer

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Former Member Oct 20, 2017 at 09:57 AM

Hi Srilatha,

Most of the country allows bad debt relief for VAT. It mean tax authority allows you to claim back the output tax that you already submitted if you write off AR bad debt that overdue more than certain months. Of course, you need to submit supporting document if you want the money back. Special case, if later on you receive incoming payment from customer, you have to pay back the output tax to tax authority.

Most of the company won't direct write off the AR bad debt. They will post the bad debt P&L and bad debt provision account first. Then clear the AR line item with bad debt provision once they get the approval from CFO.

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