How to handle a bad debt

Option 1 Create an opposite negative transaction

For property managers, or if the rent is a liability

Step 1: Create Transaction

Go to Tenancies > Statement > Add Transaction (negative number)

Step 2: Allocate Bad Debt

Locate the transaction on the statement and then allocate it to the relevant outstanding debt.

Option 2 Create an analysis code for bad debts

For self managing landlords, or if the rent is revenue.

Step 1: Create an Analysis Code. To understand this see understanding analysis code

Go to Preferences > Analysis Codes > Add Analysis Code 

*For Xero=users ensure you map this new analysis code*

Create the analysis code as shown in the image, if you use Xero you need to map this to your “bad debt” expense nominal account

Step 2: Create Transaction

Go to Tenancies > Statement > Add Transaction

Once added it will appear as a negative transaction

Step 3: Allocate Bad Debt

This will remove the outstanding as being overdue.