If you are unable to get (all or part of) one of your invoices paid, you should enter that sum as a bad debt. In order to do so you may first need to set-up a “Bad Debts” account. Starting from Durell’s Main Menu…
o You select the same client
o The “Type” dropdown is set to “Credit”
o The “Date” is as close to the invoice as possible
o The “Policy holder” and “Policy number” are the same as the invoice
o You then click the “Add” button to add a line for the unpaid amount, in which you
o Select the “Bad Debts” nominal account (e.g. “BADD”)
o You save the credit with the “Save” icon on the toolbar
The unpaid invoice will now be settled (i.e. the “Due” column in the Sales Ledger will be clear). In your Trial Balance your overall sales figure will remain unchanged, though the unpaid invoice will now be balanced by a “Bad Debt” rather than by money in the bank. However you may still need to consider the following…
Pay-aways to Introducers and Advisers
If you were due to pay commission regarding the bad invoice to one or more advisers or introducers, then for each such pay-away invoice you should make a similar CREDIT in the “Purchase Ledger”, and similarly contra each one in the Cashbook.
If in real life you’ve already banked the cheque and it has been “bounced” by the bank then you’ll need to…
In this way you’ll have the two “bounce” related items in the bankbook to maintain your running total, as well as the original invoice back in the Sales Ledger ready to contra, as described above.
See (“Bad Debts, General Insurance”)