1. Create a Bad Debts expense account

If a Bad Debts expense account doesn't already exist in your accounts list, you need to create one as described below. Or, if you account for bad debts by posting a provision to an asset account, create a 'Provision for Bad Debts' asset account instead.

1. In MYOB Essentials Accounting, click your business name in the top-right corner of the screen, then choose Accounts List.
2. Click Add accounts. If you're using the old accounts list, click Create a new account.

3. Create a new expense account as shown in the following example. This is an example only - you can use an account number and name that suits your accounts list.Note: You

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   You can select any Tax Rate when creating this account, because when you create the customer return (in the next task), you need to select the same tax rate used on the invoice which is being written off.

   
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4. Click Save. Click Cancel to return to the Accounts List pageThe account is added to your accounts list.

2. Create a customer return for the value of the debt

A bad debt is applied to a customer's account by first creating a customer return. This can then be applied to the outstanding invoice.

1. On the Sales menu, click Create customer return.
2. In the Return from field, select the customer whose bad debt is being written off.
3. In the Allocate to field on the first line, select your Bad Debts expense account. You might need to click More to display all your accounts.
4. In the Quantity field, enter 1.
5. In the Unit price field, enter the amount being written off. This is typically the amount owing on the unpaid invoice.

6. In the Tax rate field, select the same tax rate used on the invoice which is being written off. Here is our 's an example:
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7. Click Save.

3. Apply the customer return to the unpaid invoice

You can now apply the customer return to the outstanding invoice:

1. On the Sales menu, click Process customer returns.
2. Click to highlight the customer return created in the previous task, then click Apply to an invoice.
3. Enter the Payment amount for the invoice being written off. The Total credit to apply should match the Amount due on the invoice. Here's our example:
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4. Click Save. The bad debt is written off.

Get paid faster

Online invoicing is the quick and easy way to get your invoices in front of your customers. And for Australian businesses, online payments lets your customers pay straight from their online invoices.