Easily write off bad debt with Dynamics AX 2012

Posted on: March 21, 2016 | By: Jarrod Kraemer | Microsoft Dynamics AX/365

Authored by: Rosey McAdams

As undesirable as it may be, it is common for a company to have a need to write off a bad account receivable after the specific account is found to be uncollectible from a customer.  Why do businesses decide to write off bad debts?  Writing off a bad debt serves the purpose of improving the company's accuracy in accounting, it does not remove the customer's obligation to pay.  It brings visibility to the bad customer debts a company may currently have. The decision to write off a bad debt may be also be taken when it becomes clear for whatever reason that the customer is not going to pay, such as when the customer goes out of business, or comes under serious legal attack from other creditors, or simply challenges the legitimacy of the obligation. An entry to write off the bad debt will consist of two steps: 1) a credit to Accounts Receivable in order to remove the amount that will not be collected, and 2) a debit to Bad Debts Expense to report the amount of the loss on the company's income statement.  Dynamics AX makes this process incredibly easy for the accounts receivable department and the staff accountants involved in writing off this process.  In Dynamics AX, writing off bad debt is as simple as finding the customer and amount, or invoice that need to be written off, pressing a write off button, and then posting a system generated journal entry.  Follow the simple steps below to write off an entire customer balance or just a single customer invoice.

 

Write Off Entire Customer Balance

 

1.      Go to Accounts receivable>Common>Collections>Collections

 

2.      Select customer account that you would like to write off the bad debt for by clicking anywhere in the row

3.      Click on Write Off in the journals action pane

 

4.      Enter a write off date if different from today’s date and edit the reason comment field to add more description.

 

 

5.      Navigate to General Ledger>Journals>General Journal