Define Write-off Percentages for Doubtful Debt Allowance

Outcome

Percentages for the allowance are defined per age range. The combinations can also include customer number and customer group as further selection criteria.

The percentage combinations are saved in the allowance file FARDDR.

The relevant combinations of percentages and age ranges are automatically applied when creating allowances for doubtful customer invoices.

Before you start

Age ranges for the allowance must be defined in 'Doubtful Account. Define Age Range' (ARS060).

Follow These Steps

1. Start 'Doubtful Account. Define Depreciation Percentage' (ARS065/B).

2. Select sorting order 1=Age range.

   Sorting orders 2=Customer group and 3=Customer are used for sorting purposes only.

3. On the B panel, enter a combination of the following values:

   • Age range (required)
   • Customer group (optional) or
   • Customer number (optional)

4. On the E panel, enter a description and a name.

5. Enter a percentage for the allowance for this age range combination. Press Enter.

Description

The following combinations are created:

Range	Cust. group	Cust. no.	Description	Percentage
1			Period 1–2; no write-off
2			Period 3-5	30
2	AGR		Period 3–5; customers with agreements	20
2		Delfax	Period 3–5; special customer	10
3			Period 6-12	75
4			More than a year	100

In this example, no allowance is created for the first two periods after the due date. For the following three periods, an allowance of 30% is created. The only exceptions are for customers in customer group AGR (20%) and for a specific customer, Delfax (10%). After a year the full outstanding amount is written off.

Note that the combinations can have overlapping age ranges, depending on the customer group and number specified. This is not shown in this example.