Writing off an invoice balance

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In certain cases, you might want to write-off or reduce the residual balance left from an underpayment, particularly if the remaining balance is insignificant for a single invoice. You also might want to use the adjustment method to officially record decisions to award a post-billing discount for a line item.

A default GL account number that offsets the credit or debit created by the write-off process will be written. For example, if you write off credit balances, iMIS creates a debit to the default AR account and a credit to the write-off offset account specified in the finance settings.

Note: You must be a system administrator or staff user with a Finance: 4 module authorization level to have access to this functionality.

Understanding when to write off an invoice balance

Important! In most cases, it is very rare that an invoice balance would be written off; instead, invoice balances should be reversed. Writing off an invoice and reversing the invoice are not the same thing and should never be considered interchangeable.

The differences between reversing an invoice and writing off an invoice are as follows:

Reversing an invoice:
- Reverses the income/deferred invoice
- Reverses and undoes the transactions that were created as a byproduct of the original invoice generation
Writing off an invoice:
- Does not undo anything that was created with the original invoice
- Only closes out the invoice balance by debiting/crediting Accounts Receivable with an offset to the Bad Debt Expense account

Scenarios when an invoice write off could be used

The invoice write off option should only be used if a member or donor received goods or services and never paid for them, such as:

A member experienced a full term of membership benefits but has failed to pay for the renewal invoice during the entire time that they received the benefits
- To avoid this scenario, staff should be promptly reversing unpaid membership invoices and cancel the membership after the grace period has expired
A purchaser never sent back a product
Purchaser attended an event but never paid for the registration
- To avoid this scenario, staff users should have a policy that states unpaid event registrations are cancelled before the event takes place

The conditions that lead to the need to write-off an invoice are extremely rare. Once an invoice is written off, the state of the underlying transaction (i.e., membership billing status, event registration, product purchase) will remain unchanged, and the invoice balance and any related balance (orders, subscription rows) will become out of sync.

Writing off an invoice is the end of the line for the life of the invoice and the transaction that generated it. With a write-off, income still remains in place (not reversed), and the related commerce state remains unchanged. If an order or event registration invoice balance is written off, the invoice balance becomes out of sync with the order balance (i.e., the order/registration is not cancelled/reversed).

Invoice write-offs

This feature allows you to perform single or mass write-off of debit or credit balances based on a user-defined cutoff date and a maximum dollar amount. You might want to perform a mass write-off for invoices that have a remaining balance for a certain amount (for example, you want to write-off all invoices with a remaining balance of $5.00).

After choosing a cutoff date and maximum dollar amount of either credit or debit, you can select specific invoices to write off, or you can choose to write of all invoices that meet the criteria.

Setting the default write-off amount

Do the following to set the default write-off amount:

From the Staff site, go to Settings > Finance > General.
Enter a default dollar amount in the Default max invoice amount field.

Note: Negative values, letters or special characters are invalid.

Click Save.

Entering the default write-off offset account

Do the following to enter the default write-off offset account:

From the Staff site, go to Settings > Finance > Financial entities.
Select the desired financial entity for which you want to select a write-off offset account.
Click the Default Accounts tab.
From the Write-off/Offset drop-down, select the GL account number to which you will be recording the write-offs.
Click Save & Exit.

Processing write-offs

Do the following to process write-offs:

From the Staff site, go to Finance > Closing procedures > Invoice write-offs.

Note: The Cutoff date field defaults to the system date and the Max invoice amount field defaults to the amount specified in the Default max invoice amount field (Settings > Finance > General). You can overwrite either or both of these fields as needed. iMIS writes off all debit or credit balances where the INVOICE_DATE is equal to or older than the date specified in the Cutoff date field and the balance is equal to or less than the amount specified in the Max invoice amount field.

Note: The Max invoice amount field is required, and cannot accept non-decimal values, negative values, letters or special characters.

Override the Cutoff date and Max invoice amount as desired, select an Invoice type of Debit or Credit, and click Find. A list of all records that meet the Cutoff date and Max invoice amount criteria are displayed. Select these records for write-off by:
- Selecting an individual record
- Selecting all records
Export a list of all displayed items by clicking Export for an audit report before processing the actual write-offs.
After you verify that the records selected for write-off are correct, click Record Write-Offs to process the actual write-offs.
A message is displayed, asking you to verify that you would like to continue with the write-off process. Click Yes.

To view the write-off, post the associated batch. From the Staff site, go to Finance > Batches, then search for the batch. See Managing batches for more information.