Need to issue credit note for invoice bad debt..how?

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sinbadsailor

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As the line says, shortfall in amount received for an invoice. Accountant asking me to issue credit note? How is this done?
 
If the invoice is genuine and money is still owed against an invoice by a debtor, why on earth would you want to issue a credit note?

Whose accountant is it, yours or the debtors?

Is it a large amount or are we talking odd cents on an invoice?
 
mathepac said:
If the invoice is genuine and money is still owed against an invoice by a debtor, why on earth would you want to issue a credit note?

Whose accountant is it, yours or the debtors?

Is it a large amount or are we talking odd cents on an invoice?
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if you know you are not going to get paid (they have gone bust etc) they you are quite within your rights to issue a credit note, this will allow you to claim back the sales vat you paid on the sale, and also reduce your sales for tax reasons (although some people put it against bad debts in their overheads)


how to do it depends on your accounts system, but i'd say add in a credit note for the amount of the balance
 
Sorry, maybe I should have given more detail from the outset.
My accountant is doing my end of year. I had submitted an invoice that was only partially paid by one of my customers after a dispute.
The accountant has asked me to issue a credit note for the difference.

What format would this take? Similar to an invoice but with balance details etc?
 
Is this some sort of "creative accounting"?

By the way - I only recently read that the term "creative accounting" was allegedly coined by Mel Brooks in the script for The Producers.
 
The accountant probably means an internal credit note as opposed to 'offering credit' of any sort. If the shortfall is put down to credit, all is balanced.
 
not so bizarre or creative

1) if the customer is getting a full VAT input credit on the invoice even though only part paid and

2) if the supplier is accounting for VAT on an invoice basis.
 
At the moment your debtors' ledger is showing a balance as follows:

Amount owed by XLtd: €1210.

If you have agreed with the client to write this off, just issue them with a credit note and put it through your accounts system.

It will automatically credit your debtors' ledger by €1,210
It will debit sales by €1,000
It will debit VAT by €210.

The last is probably the most important as you will owe €210 less VAT to the Revenue.

If you are pursuing them legally, you should probably still put a credit note through the system so that you get the VAT back.

If you do succeed in your legal case, then you can just reissue the invoice through your system.

But if you are not comfortable asking your accountant how to do this, then maybe you need a different accountant.

Brendan
 
This doesnt add up.

The OP is a newly-established IT contractor. http://www.askaboutmoney.com/showthread.php?t=68196

The "request from their accountant" makes no sense unless they are on the Invoice basis for VAT. They are only compelled to be on this basis if their turnover is over €635,000 per annum. Assuming their turnover is under this level, then they should be on Cash Receipts basis. In which case, it is totally unnecessary to make any adjustments to VAT returns in respect of uncollected debts. Any accountant worth their salt would know this.
 
I knew there was a reason that I am dumping them after this years accounts.
I began dealing with head consultant in there but from then on I seem to be passed from newbie to newbie and these are where the questions are coming from.

They are charging me in excess of 2500 per year for their 'service' which mainly amounts to auditing my own records and ammending my P35 for the year if I am out.

I have not done anything so far regarding the credit note, waiting on a response from my soon to be fired accountant.
 
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