Write-off methods
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods
section
2026-02-19T17:09:06+01:00
# Write-off methods
Write-off methods - overview
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/write-off-methods-overview
page
You can use write-off functionality to implement the direct write-off and allowance methods.
2026-02-19T17:09:06+01:00
# Write-off methods - overview
You can use write-off functionality to implement the direct write-off and allowance methods.
In this topic, you will read about how write-off methods are used and what transactions are generated when you implement the direct write-off or allowance method.
## Direct write-off method
Your business may use the direct write-off method for financial reporting when you can determine that an amount will be uncollectible in the period when the sale took place and that the amount represents an insignificant amount, as with bank charges. The direct write-off method ignores VAT amounts previously paid to a tax authority on the documents being written off. You may need to manually record the written-off amounts and the corresponding VAT amounts to use them for adjustments to the tax return.
In the direct method, a write-off requires a journal entry that increases an expense account
(the Balance write-off account) and a journal entry that decreases accounts
receivable for the customer. You configure a reason code that determines the expense
account and then write off an amount from a customer invoice by using this reason
code.
Accounts are affected as shown below.
|Account|Debit|Credit|
|---|---|---|
|Balance write-off account|Amount|0.0|
|Customer ledger account|0.0|Amount|
If you write off customer credits, the amount will be recognised as income, and the customer balance of accounts receivable will be increased. You configure a reason code that determines the income account and then write off an amount from a customer invoice by using this reason code. Accounts are affected as shown in the following table.
|Account|Debit|Credit|
|---|---|---|
|Credit write-off account|0.0|Amount|
|Customer ledger account|Amount|0.0|
If a customer pays a debt that has been written off, you enter the payment as usual and do not
apply it to any document.
You then write off the payment by using a document of the
**Credit write-off** type.
## Allowance method
The allowance method is based on the idea that some of customer debts will not be paid, although companies don't know in advance which customers will not pay. This method involves using two special accounts:
+ Allowance for doubtful accounts: This contra asset account to accounts receivable contains the estimated amount of the debts that will not be collected. The estimate may be a percentage of sales or an amount based on an ageing analysis of sales receivables.
+ Bad debts expense: This is a temporary expense account that reports credit losses for only the period shown on the income statement.
The allowance method is used as follows: At the end of the accounting period, you
estimate the amount to become uncollectible in accounts receivable and manually
update accounts by using the [Journal transactions (GL301000)](/visma-net-erp/help/general-ledger/general-ledger-windows/journal-transactions-gl301000/) window.
Accounts are affected as shown below.
|Account|Debit|Credit|
|---|---|---|
|Bad debts expense|Amount|0.0|
|Allowance for doubtful accounts|0.0|Amount|
You configure a reason code that points to the Allowance for doubtful accounts
account.
When a specific customer's account is identified as uncollectible, you
write off debts by using this reason code.
Accounts are affected as shown below.
|Account|Debit|Credit|
|---|---|---|
|Allowance for doubtful accounts|Amount|0.0|
|Customer ledger account (customer account)|0.0|Amount|
Under the allowance method, a write-off does not change the net realisable value of
sales receivables.
It simply reduces sales receivables and the allowance for bad
debts by equivalent amounts.
Related pages
Concepts
Tasks
Windows
About write-off setup
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/about-write-off-setup
page
Setting up write-off functionality is similar for the direct write-off and allowance methods.
2026-02-19T17:09:06+01:00
# About write-off setup
Setting up write-off functionality is similar for the direct write-off and allowance methods.
To use the functionality of write-offs, you need to configure the following entities:
+ General ledger accounts to record balance and credit write-offs to.
+ Reason codes to point to the general ledger account and subaccount where write-offs are to be recorded.
+ Customer accounts with write-off functionality enabled and write-off limits specified. If these accounts already exist, you just need to change their settings.
In this topic, you will read about setting up write-off functionality and additional information that you may need during configuration.
## Write-off process setup
To use the write-off functionality, you perform the following steps:
1. You configure the general ledger accounts and subaccounts to be used for writing off expenses by using the [Chart of accounts (GL202500)](/visma-net-erp/help/general-ledger/general-ledger-windows/chart-of-accounts-gl202500/) window as follows:
+ For the direct write-off method, you configure an expense account (for instance, the Balance write-off account) and subaccounts (if needed).
+ For the allowance method, you configure a contra asset account to accounts receivable (for instance, Allowance for doubtful accounts) and an expense account (for example, Bad debts expense) and subaccounts (if needed).
1. In the [Reason codes (CS211000)](/visma-net-erp/help/inventory/inventory-windows/reason-codes-cs211000/) window, you configure reason codes that point to the general ledger accounts you have configured in Step 1:
+ For the direct write-off method, you create a reason code that points to the expense account and subaccount to be used for writing off expenses. You can configure different reason codes to distribute write-offs to different accounts or use one reason code for all such expenses.
+ For the allowance method, you create a reason code that points to the contra asset account (Allowance for doubtful accounts) and subaccount. Then you write off bad debts by using this reason code directly from an invoice and make the entries manually for the contra asset account in the [Journal transactions (GL301000)](/visma-net-erp/help/general-ledger/general-ledger-windows/journal-transactions-gl301000/) window.
For details, see [Add a reason code](/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/add-a-reason-code/).
1. You enable write-off functionality for a group of customer accounts by using the [Customer classes (AR201000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customer-classes-ar201000/) window or individually for a customer account by using the [Customers (AR303000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customers-ar303000/) window. For details, see [Enable or disable write-offs](/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/enable-or-disable-write-offs/).
### After configuration is done, you can
+ Write off balances directly from an invoice when you apply a payment to it by using the [Customer payments (AR302000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customer-payments-ar302000/) window.
+ Write off balances or credits of several documents at once by using the [Write-off balances and credits (AR505000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/write-off-balances-and-credits-ar505000/) window.
+ Write off balances directly from an invoice when you apply a payment (created to match a bank transaction) to it by using the [Process bank transactions (CA306000)](/visma-net-erp/help/cash-management/cash-management-windows/process-bank-transactions-ca306000/) window.
## Default reason codes
By using the [Customer ledger preferences (AR101000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customer-ledger-preferences-ar101000/) window, you can specify the reason codes to be used by default for writing off credits and balances. The system will fill in the reason codes specified here in the **Reason code** field in the [Write-off balances and credits (AR505000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/write-off-balances-and-credits-ar505000/) window, as well as in the [Customer payments (AR302000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customer-payments-ar302000/) window, when you select the type of write-off operation.
Related pages
Concepts
Tasks
Windows
Add a reason code
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/add-a-reason-code
section
You define reason codes on the Reason codes (CS211000) window.
2026-02-19T17:09:06+01:00
# Add a reason code
You define reason codes on the Reason codes (CS211000) window.
For more information: [Reason codes (CS211000)](/visma-net-erp/help/inventory/inventory-windows/reason-codes-cs211000/).
You define reason codes on the[Reason codes (CS211000)](/visma-net-erp/help/inventory/inventory-windows/reason-codes-cs211000/) window.
For each reason code, you must specify with what transaction it
will be used.
The transaction type determines the Visma Net workspace the reason code can be used in.
You can define the reason codes for the
following types of transactions originated from the Customer ledger workspace:
credit write-off and balance write-off.
Before doing the following, make sure that the General ledger accounts and subaccounts you are going to use for write-offs are configured.
1. Go to the [Reason codes (CS211000)](/visma-net-erp/help/inventory/inventory-windows/reason-codes-cs211000/) window.
1. Click .
1. In the **Reason code** field, type the identifier of the reason code. An alphanumeric string of up to 10 characters may be used.
1. In the **Description** field, type a short description of the reason code.
1. In the **Usage** field, select the option indicating where the reason code will be used:
+ To use the reason code for writing off credits, select **Credit write-off**.
+ To use the reason code for writing off balances, select **Balance write-off**.
1. In the **Combine sub. from** field, construct a subaccount mask. Point to each segment and press F3 to open the list of options.
1. In the **Account** field, select the account to be updated by the transaction amount for transactions marked by the reason code.
1. In the **Subaccount** field, specify a subaccount according to the mask. Point to each segment and press F3 to open the list of options.
1. Click .
Related pages
Concepts
Tasks
Windows
Create reason codes
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/create-reason-codes
section
2026-02-19T17:09:06+01:00
# Create reason codes
1. Go to the [Reason codes (CS211000)](/visma-net-erp/help/inventory/inventory-windows/reason-codes-cs211000/) window.
1. Click .
1. In the **Reason code** field, click  to see the next free number for you to enter in this field.
1. Enter the number in the **Reason code** field.
1. Enter a **Description** for your reason code.
1. In the **Usage** field select one of the following usages:
1. **Sales**
1. **Issue**
1. **Receipt**
1. **Adjustment**
1. **Transfer**
> [!NOTE]
> To create reason codes for write-offs, see: [Create reason codes for write-offs](/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/create-reason-codes-for-write-offs/).
1. In the **Account** field, click  to select the account that the reason code will affect.
1. In the **Subaccount** field, enter the subaccount that the reason code will affect.
1. Click .
> [!NOTE]
> Reason codes are also used for stocktaking reviews. The default code for a stocktaking review is **4**.
Related pages
Concepts
Tasks
Windows
Enable or disable write-offs
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/enable-or-disable-write-offs
section
You can define write-offs to be enabled by default for customers grouped under a particular class or modify the default setting for a particular customer of the class.
2026-02-19T17:09:06+01:00
# Enable or disable write-offs
You can define write-offs to be enabled by default for customers grouped under a particular class or modify the default setting for a particular customer of the class.
You use the [Customer classes (AR201000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customer-classes-ar201000/) window to configure default write-off settings for each class and the [Customers (AR303000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customers-ar303000/) window to override default class settings for particular customers.
## Set the default write-off settings for customers of a customer class
1. Go to the [Customer classes (AR201000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customer-classes-ar201000/) window.
1. In the **Class ID** field, select the customer class that you want to enable or disable write-offs for.
1. On the **General information** tab, in the **Default financial and payment settings** area, do the following:
1. Select the **Enable write-offs** check box if you want to allow write-off operations for customers of this customer class or clear the check box to disable write-offs for customers of the class.
1. If you have enabled write-offs for the class, in the **Write-off limit** field, type the maximum value that may be written off for each application line for documents of customers of the class. All balances and credits that are less than this value may be written off.
1. Click .
You can then change default write-offs settings for each customer individually.
## Override default write-off settings for a customer
1. Go to the [Customers (AR303000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customers-ar303000/) window.
1. In the **Customer number** field, select the customer that you want to enable or disable write-offs for.
1. On the **General settings** tab, in the **Financial settings** area, do the following:
1. Select the **Enable write-offs** check box if you want to allow write-off operations for the selected customer or clear the check box to disable write-off operations.
1. If you have enabled write-offs for the class, in the **Write-off limit** field, type the maximum value that may be written off for each application line. All balances and credits that are less than this value may be written off.
1. Click .
Related pages
Concepts
Tasks
Windows
Create reason codes for write-offs
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/create-reason-codes-for-write-offs
section
2026-02-19T17:09:06+01:00
# Create reason codes for write-offs
## Before you start
In the [Reason codes (CS211000)](/visma-net-erp/help/inventory/inventory-windows/reason-codes-cs211000/) window you can create reason codes for **Balance write-offs** and **Credit write-offs**. These are used in the [Write-off balances and credits (AR505000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/write-off-balances-and-credits-ar505000/) and [Process bank transactions (CA306000)](/visma-net-erp/help/cash-management/cash-management-windows/process-bank-transactions-ca306000/) windows.
> [!NOTE]
> Reason codes are mandatory for performing write-offs on your invoices or credit notes
> [!NOTE]
> Reason codes are also used for stocktaking reviews. The default code for a stocktaking review is **4**.
1. Go to the [Reason codes (CS211000)](/visma-net-erp/help/inventory/inventory-windows/reason-codes-cs211000/) window.
1. Click .
1. In the **Reason code** field, click  to see how many reason codes already exist: use the next available number for your new reason code.
1. In the  -field, fill in the number of your new reason code.
1. In the **Description** field, enter the reason for your write-off.
1. In the **Usage** field select one of the following:
1. **Balance write-off** - to write-off an underpayment. or
1. **Credit write-off** - to write-off an overpayment.
1. In the **Account** field, click  to select the account the reason code will affect.
1. In the **Subaccount** field, enter the subaccount the reason code will affect.
1. Click .
Related pages
Concepts
Tasks
Windows
Write off balances and credits
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/write-off-balances-and-credits
page
By using the Write-off balances and credits (AR505000) window, you can view the balances and credits (of appropriately low amounts) of customers for which write-offs are allowed.
2026-02-19T17:09:06+01:00
# Write off balances and credits
By using the Write-off balances and credits (AR505000) window, you can view the balances and credits (of appropriately low amounts) of customers for which write-offs are allowed.
For more information: [Write-off balances and credits (AR505000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/write-off-balances-and-credits-ar505000/).
By using the [Write-off balances and credits (AR505000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/write-off-balances-and-credits-ar505000/) window, you
can view the balances and credits (of appropriately low amounts) of customers for
which write-offs are allowed.
You can select the documents to be written off.
## Before you start
Make sure that reason codes are properly configured and write-offs are enabled. For details, see: [About write-off setup](/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/about-write-off-setup/).
## Write off small balances
1. Go to the [Write-off balances and credits (AR505000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/write-off-balances-and-credits-ar505000/) window.
1. In the **Type** field, select one of the following options:
+ To write off underpayments: **Balance write-off**
+ To write off overpayments: **Credit write-off**
1. In the **Doc. date** field, select the date when the write-off will be performed.
The system automatically fills in the **Post period** field based on the selected document date.
1. In the **Branch** field, select the branch for which you want to display data. The field is automatically filled with the branch you have access to.
1. Optional: In the **Customer** field, select the customer for which you want to write off small balances from the list of customers for which write-offs are permitted.
1. In the **Reason code** field, select the reason code you want to mark write-off transactions with. The reason code defines the account and subaccount to be used for writing off credits or balances. The field is automatically filled with the default reason code specified in the [Customer ledger preferences (AR101000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/customer-ledger-preferences-ar101000/) window.
In the table, the system lists the
documents for which the balance amount (underpayment or overpayment,
depending on the selected write-off type) is below the limit.
After you
increase the limit amount, you can write off the balances that exceed the
default limit.
1. To write off balances for documents, do one of the following:
+ To write off the small balances for particular documents, select the unnamed check box in the document row for each document, and then click **Process** in the window toolbar.
+ To write off the small balances for all listed documents, click **Process all** in the window toolbar.
After processing has been successfully completed, you can view the batch in the [Journal transactions (GL301000)](/visma-net-erp/help/general-ledger/general-ledger-windows/journal-transactions-gl301000/) window.
Related pages
Concepts
Tasks
Windows
Write-off underpayments or overpayments
/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/write-off-underpayments-or-overpayments
section
2026-02-19T17:09:06+01:00
# Write-off underpayments or overpayments
## Before you start
To be able to write off, you have to enable this in the settings for your customer: [Enable write-offs for customer](/visma-net-erp/help/customer-ledger/manage-customers/enable-write-offs-for-customer/).
1. Go to the [Write-off balances and credits (AR505000)](/visma-net-erp/help/customer-ledger/customer-ledger-windows/write-off-balances-and-credits-ar505000/) window.
1. In **Type**, select the write-off operation you want to use:
1. **Balance write-off** - to write-off an underpayment.
1. **Credit write-off** - to write-off an overpayment.
1. Select a **customer** by clicking .
1. Optional: Select a **post period** by clicking .
1. Select a **reason code** by clicking . If there is no relevant reason code: [Create reason codes for write-offs](/visma-net-erp/help/customer-ledger/manage-credit-policy/write-off-methods/create-reason-codes-for-write-offs/).
1. Go to the table, and select the invoices you want to process.
1. Click:
1. Process the selected invoices, or
1. Process all in the list of invoices / credit notes, and create batches with status **Posted** or **Unposted**.
The write-offs are posted to the general ledger.
Related pages
Concepts
Tasks
Windows