Handling Bad Debts

New Zealand IRD Rules

IRD have the following requirements in order to claim Bad Debts (for GST and company tax purposes):

• You need to have accounting entries (write-off journals) that write bad debts out of the main books.  (In our Debtors module we have provided a transaction type of "WO" for this purpose.)
• You must decide to write these off before end of GST period or Tax year, and record this in your company minute book.  (They cannot be done retrospectively after the cut-off date has passed.)
• You can enter these "written-off invoices" into a separate debtors ledger, and continue to send separate statements.  But you cannot send combined statements that show both current and old invoices (that have been written off).  (IRD would then view such old invoices as "still considered to be recoverable".)

Implementation Using Adminsoft Software

The Adminsoft software has flexible data path settings.  This allows you to set up a separate "Bad Debts" ledger that still links back to your main Address Book for client name and address details, and you are entitled to run such a secondary ledger at no extra charge under our software licence rules (as long as it is for the same licensee company).  You can easily set up a separate shortcut that launches it.  Contact our Help Desk for assistance if you would like to do this.