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Master

How do we handle Bad Debt in zuora

If we make an invoice for a customer and then, despite all efforts, we can't get the money from them.  My finance team say this should go into a Bad Debt accounting code.

 

In Zuora:

Invoice is made  (Credit Revenue, Debit A/R )

We write off the invoice. 

This makes a Credit Memo ( Credit A/R, Debit Revenue )

 

Now what? How do I, or finance, now put that against a Bad Debt accounting code? 

4 REPLIES 4
Guru

Re: How do we handle Bad Debt in zuora

Hello @Nigel, you need to first make sure that you have your bad debt accounting code configured in Zuora.  When I attempt to write off an invoice I do the following:

  1. Open the invoice
  2. Create invoice adjustment
  3. Change the reason code to Write Off 
  4. Change the Accounting Code to Bad Debt
  5. Enter the amount you are writing off
  6. Create invoice adjustment

Please let me know if you have any other questions.

 

Randi

Master

Re: How do we handle Bad Debt in zuora

@rjohnson I think invoice (item) adjustments are only available if you don't have the advanced AR / invoice setllement features on which we do - so we have to make credit memos instead. I assumed there'd be a way to mark a credit memo to apply to a different accounting code so it would credit that, rather than just credit it back to Account Receivable.

Zuora Staff

Re: How do we handle Bad Debt in zuora

Hi

We can create a credit memo against a particular invoice that is supposed to be declared as bad debt. 
 
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Go to Action - >  Edit on the CM lines and change the default account to bad debt account.
 
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This should reduce the AR and increase the bad debt account when applied to the invoice.  
 
Please see if this helps.
 
Thanks
Master

Re: How do we handle Bad Debt in zuora

Sorry - hadn't seen this reply (some how wasn't subscribed to the topic).

 

In order to edit the accounting code, we have to make the credit memo manually right?  On an invoice there is a "write-off" functionality, but all that does is reverse the invoice and not update the charge through date so it's not re-invoiced on a bill run.   Calling this "write-off" sounds wrong as there's no option in that to show this as a bad debt.

 

One alternative suggested was to use an external payment, with "bad debt" as the bank account on that which almost seems simpler for the same effect.