Scenario: A bad debt relief is accounted for an invoice after six months of no payment receive from the customer. Later on, the customer cleared his debt after I have registered his invoice as bad debt relief.
In such case, when collections are made against bad debt relief, repayment of GST is required - Bad debt recovery.
What is bad debt recovery?
Bad debt recovery is referring to a business debt that is being recovered either in whole or in part after it has been classified as bad debt.
When do I record bad debt recovery?
You will need to record your bad debt recovery immediately, once you have receive repayment for that bad debt. Bad debt recovery can only be done when you have registered that debt as bad debt relief under GST module.
Bad debt recovery in TreezSoft
In TreezSoft cloud accounting, the process has been automated - if you have issued bad debt relief previously, Treezsoft Cloud Accounting captures the repayment tied with the bad debted invoice and will automatically update the bad debt recovery for you. You do not have to key in the required information multiple times as the automation process that has in placed in Treezsoft improves the process flow hence reduce time and effort for these lengthy procedures!
To issue Bad Debt Recovery for Sales, navigate through: Customer > Receive Payments.
Then, click on 'New Receive Payments' button.
Next, follow the following steps:
1. Select Customer and fill in the rest of the information.
2. Observe whether it is in GST Mode.
3. & 4. Enter the amount to be applied
5. Tick on invoice(s) that is to be applied.
6. If any applied invoice has issued bad debt relief previously, system will auto detect and calculate total relief to be recovered.
7. Save.
Bad debt recovery will be auto created.
You can check your Bad Debt Recovery documents by navigating through: Tax > Customer Bad Debt (AR) > Bad Debt Recover (AR).
You will be able to verify the Bad Debt Recovery documents at this page.
Note: Bad debt recovery transaction and double entry would be automatically created by system after saved.
Continue reading for GST:
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