VOID versus Write-OFF: What's the difference?

Monday, February 7, 2011

VOID versus Write-OFF: What's the difference?Members Only provides two ways to get an invoice off your books - Void and Write-Off.  There are real differences in the accounting effects of these two operations. You should know which to use in a given situation.

When should you VOID a sale? You should use VOID when the invoice was issued in error, or if, for any other reason, you wish to withdraw the invoice. In other words, use VOID when you decide that the customer really does not owe the amount.  A transaction is entered that reverses the full amount of the charge and debits back the revenue earned. If the customer has paid anything against this sale, the sale will now show a credit balance, which you may choose either to refund or to credit to another open invoice.

When should you Write-Off a sale? You should use write-off when the customer really does owe the amount, but you have determined that the debt is uncollectable. Your auditor may have advice on what collection efforts are required before you can write-off a debt. A transaction is entered for the current balance of the sale, crediting Accounts Receivable and debiting your Bad Debts account. The balance of a sale after a write-off will always be zero.
For example, if a member goes out of business owing you money, you should write-off that invoice.

Tip Category AR
Get this widget!

Powered by Orchid Suites
Orchid ver. 4.7.6.