Recording Bad Debt
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Your tenant has left, disappeared without trace and they still owe you money. It's an awful situation but you still have to record it. Here's how you do it in Landlord Vision.
First you must add an expense for the TOTAL amount of all unpaid rental invoices via Expenses > Bills > Green +
Supplier - in this case would be the tenant
Category - Set this to the bad debt account
Like this example:
Then pay this expense AND the unpaid rental invoice from the Suspense account *NOT* your bank account.
Secondly, add a payment to the unpaid invoices
Navigate to Income > Payments > add a payment for the amount you are writing off as bad debt and allocate this to the unpaid invoice or invoices. *This MUST be paid from the Suspense account too > Save
The expense contras off the amount of unpaid the system was expecting. Let's consider the following example. A tenant pays £500 a month in rent and has decided to underpay the last month leaving £300 of arrears which you then decide to write off. If you are using the accruals basis, the software will have raised an invoice for £500 which will appear as income in your P&L and tax report. by raising the expense for £300, the same report now shows that there was an expense for £300 of bad debt, thereby reducing your profit
You will have paid £300 in to the Suspense account and £300 back out, so that account will be back to zero. Your bad debt expense account will have increased by £300
First you must add an expense for the TOTAL amount of all unpaid rental invoices via Expenses > Bills > Green +
Supplier - in this case would be the tenant
Category - Set this to the bad debt account
Like this example:
Then pay this expense AND the unpaid rental invoice from the Suspense account *NOT* your bank account.
Secondly, add a payment to the unpaid invoices
Navigate to Income > Payments > add a payment for the amount you are writing off as bad debt and allocate this to the unpaid invoice or invoices. *This MUST be paid from the Suspense account too > Save
The expense contras off the amount of unpaid the system was expecting. Let's consider the following example. A tenant pays £500 a month in rent and has decided to underpay the last month leaving £300 of arrears which you then decide to write off. If you are using the accruals basis, the software will have raised an invoice for £500 which will appear as income in your P&L and tax report. by raising the expense for £300, the same report now shows that there was an expense for £300 of bad debt, thereby reducing your profit
You will have paid £300 in to the Suspense account and £300 back out, so that account will be back to zero. Your bad debt expense account will have increased by £300
