How do I account for collections payments?

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Meghan O'Connor

• May 09, 2022 20:47
• Edited

Our company has a customer with outstanding invoices who stopped paying. We settled on an amount for them to pay off which is less than the balance of the invoice.

There are two options (I think) for how we'd handle this:

1. Apply a credit memo to the original invoice for the amount we're writing off. Then apply any consecutive payments to the original invoice.

OR 2. Apply a credit memo for the full amount of the invoice. Then create something (unsure if it's a GL Account for Collections Payments or another invoice) to apply the collections payments to.

Which would be the best way to go about accounting for these in AS's system? Also open to other ideas!

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  Rebecca Ralls

  • May 12, 2022 21:30

  I like option 2 best.  I think it most accurately reflects the actuall activity.  The only reason I might go with option 2 instead is if you needed the aging to show up differently.

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