When your customer sends you payment for an invoice that you’ve already written off to bad debt the best way to handle this is to re-open the Invoice on the Customer Account. This should be done through the Cash Receipts System. This process will show the Customers Invoices as un-paid and it will not affect your cash account. In the Accounts Receivable System choose Cash Receipts System.
You will enter a deposit in Enter & Edit Deposit and instead of entering a check amount, you will enter a zero (0) deposit amount since there is no money going to the bank. Below is the menu path.
Accounts Receivable System
Cash Receipts System
Enter & Edit Deposit
The screen below is the Enter & Edit Deposit heading screen. In the Reference for GL you can enter a message such as bad debt reversal; you will be able to view this message in a GL Transaction Inquiry. Then simply press Esc or Click Ok to go to the next screen. See the example shown below.
Enter or Click on New Line to choose your first Customer. Enter a few letters of your Customers Name to select the Customer. For the check amount enter Zero (0). An example is shown below.
If you entered the invoice number on the check detail screen the invoice that you typed in will automatically appear in the customer invoice screen. If you did not type in the customer invoice or if there are multiple invoices you need to open, click on Select Invoice on the right side of the screen under Options. Each invoice that needs to be opened will be paid with the adjustment to your bad debt account which will increase the balance due on the invoice. In the example below the Open Amount on the invoice was 0 and we applied a negative -109.50 in the invoice pay amount as well in the gl adjustment amount for bad debt leaving a balance due on the invoice.
The customer is invoice has a balance due again. You can now print your Deposit Edit Report and Update the Deposit as usual. The G/L transaction posting will be a Debit to Accounts Receivable and Credit to your Bad Debt Account.
After you update your deposit, you can view a customer inquiry and see that returned check amount is back on that customers account and open for you to receive another payment.