Create Allowance for Doubtful Debts

This instruction explains how you automatically create partial or complete write-offs of doubtful debts in accounts receivable; that is, an allowance.

Outcome

See Managing Allowance for Doubtful Debts.

Before you start

The starting conditions listed in Managing Allowance for Doubtful Debts must be met.

Follow These Steps

  1. Start ‘Doubtful Account. Create Allowance’ (ARS130/B).

    The panel lists previous allowances and proposals with their respective statuses. The following statuses are used:

    0 = The proposal is created and can be processed

    1 = The allowance/allowance proposal is being created

    2 = The proposal is being changed by another user

    4 = The proposal is being deleted

    9 = The allowance is created and the general ledger is updated.

    Specify Name and Selection Criteria

  2. Create a new allowance proposal by giving it a name. The name can consist of up to eight alphanumeric characters.

  3. Panel (ARS130/E) is activated. Enter a description (required field), the report layout and the report text to use as a heading.

    At present only report layout 1 is available.

  4. Enter any of the following ranges and press Enter: Customer group, customer number, and invoice number.

  5. On the B panel, where the new allowance setup is displayed, select one of these alternatives:

    • To change the settings, select option Open and repeat steps 3 and 4
    • To create a proposal based on the setup, go to step 6.

    Create Allowance Proposal

  6. On panel (ARS130/B), specify option 9=Run for the allowance setup.

  7. On the E panel, enter the following values:

    • Proposal/update (required): The field indicates whether a detailed allowance proposal should be created without update or if the general ledger should be updated directly with the allowance created.
    • Proposal action (required): The field indicates whether a new proposal should be created/updated or if the general ledger should be updated by an existing proposal based on this allowance setup. The first alternative ensures that any new transactions matching the age ranges are included in the update. The second alternative means that only transactions selected when the proposal was created will be used in the update.
    • Accounting date (required)
    • Voucher text (required)
    • Printout code: The field indicates whether a detailed list should be printed when creating the allowance proposal or the final allowance. If a proposal is created, option 1=Yes, must be selected.
    • Report layout: The layout selected in step 2 is displayed.
    • Report text: The text defined in step 2 is proposed but can be changed.
  8. Enter the required values and press Enter to create the proposal and to print a preliminary accounting journal.

    Adjust the Allowance Proposal

  9. Review the proposal to see a) which invoices are classified as doubtful debts, and b) how the general ledger will be updated.

  10. Select an alternative:

    • Select an alternative:
    • To exclude a specific invoice from the proposal, change the revised due date in ‘Customer Invoice. Change’ (ARS201/E); the program can be reached from ‘Accounts Receivable. Display’ (ARS200).

    Create a Final Allowance for Doubtful Debts

  11. On panel (ARS130/B), select option 9=Run for the proposal.

  12. On panel (ARS130/E), change any of the parameters entered when creating the proposal, if necessary, and make sure that the value in the Proposal/update field is 1=Update.

  13. Press Enter to create the final allowance and to return to panel (ARS130/B).

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