Collections Scenarios - Write Off

collection scenarios write off this document outlines the various scenarios in which businesses may choose to write off the outstanding amount as bad debt when an invoice becomes uncollectible as a finance ops user, i can write off invoices for bad debts a credit memo is created to offset an invoice by writing off the remaining balance the items on the credit memo are then applied to the corresponding items on the invoice when an invoice is written off, the balance of each invoice item and invoice taxation item must be zero users are only allowed to write off the remaining balances of an invoice if an invoice is fully paid, the write off operation is not allowed when a finance ops user writes off an invoice, the following actions occur in an atomic operation a credit memo with a “writeoff” payment status is created and associated with the invoice the transaction amount of the credit memo is equal to the remaining balance of the invoice a credit memo application for the write off credit memo is created the balance of the invoice is zeroed out and its payment status is set to “written off” if there are debit memos applied to the invoice, the debit memos will be automatically written off once the invoice is written off the following business logic will be applied only active invoices with remaining balances or associated debit memos with remaining balances can be written off the credit memo used for writing off an invoice can be canceled only along with the cancellation of the invoice canceling the write off invoice will automatically cancel the associated write off credit memos case 1 write off an open invoice invoice inv 001 has a total amount of $100 with all positive items a user now writes off the invoice the following shows the details of the credit memo application payment application item invoice id record type amount payment type operation payment id credit memo application cma 001 invoice inv 001 credit memo $100 credit memo writeoff cma 001 after the credit memo application is created, both the invoice and the credit memo have the balance set to $0 the payment status of the invoice is set to ”written off” invoice item (inv 001) amount balance before write off balance after write off ii 001 $20 $20 $0 ii 002 $30 $30 $0 ii 003 $50 $50 $0 credit memo item (cma 001) amount balance cmi 001 $20 $0 cmi 002 $30 $0 cmi 003 $50 $0 invoice inv 002 has a total amount of $100 with negative items a user now writes off the invoice the following shows the details of the credit memo application payment application item invoice id record type amount payment type operation payment id credit memo application cma 002 invoice inv 002 credit memo $100 credit memo writeoff cma 002 after the credit memo application is created, both the invoice and the credit memo have the balance set to $0 the payment status of the invoice is set to ”written off” invoice item (inv 002) amount balance before write off balance after write off ii 001 $90 $90 $0 ii 002 $20 $20 $0 ii 003 $10 $10 $0 credit memo item (cma 002) amount balance cmi 001 $90 $0 cmi 002 $20 $0 cmi 003 $10 $0 case 2 write off a partially paid invoice invoice inv 003 has a total amount of $100 with all positive items and received payment #1 of $30 a user now writes off the invoice the following shows the details of the credit memo application payment application item invoice id record type amount payment type operation payment id credit memo application cma 003 invoice inv 003 credit memo $70 credit memo writeoff cma 003 after the credit memo application is created, both the invoice and the credit memo have the balance set to $0 the payment status of the invoice is set to ”written off” invoice item (inv 003) amount balance before write off balance after write off ii 001 $20 $0 $0 ii 002 $30 $20 $0 ii 003 $50 $50 $0 credit memo item (cma 003) amount balance cmi 001 $20 $0 cmi 002 $50 $0 in this case, the payment can be refunded, the balance of the invoice will not change, and its payment status is “written off” invoice inv 004 has a total amount of $100 with negative items and applied credit memo #cm 001 of $40 a user now writes off the invoice the following shows the details of the credit memo application payment application item invoice id record type amount payment type operation payment id credit memo application cma 004 invoice inv 004 credit memo $60 credit memo writeoff cma 004 after the credit memo application is created, both the invoice and the credit memo have the balance set to $0 the payment status of the invoice is set to ”written off” invoice item (inv 004) amount balance before write off balance after write off ii 001 $10 $0 $0 ii 002 $20 $0 $0 ii 003 $90 $60 $0 credit memo item (cma 004) amount balance cmi 001 $60 $0 in this case, the credit memo can be unapplied from the invoice when fully unapply credit memo #cm 001, the invoice balance will change to $40, and the payment status of the invoice change to “partially written off” case 3 write off the invoice associated debit memos when a finance operations user writes off invoice associated debit memos, the following actions occur in an atomic operation 1\ create a credit memo with a "writeoff" payment status associated with the debit memo the transaction amount of the credit memo is equal to the remaining balance of the debit memo 2\ create a credit memo application for the write off credit memo 3\ zero out the balance of the debit memo and set its payment status to "written off " as a finance ops user, i can reverse a written off invoice when the finance ops user cancels the invoice, the associated credit memos are automatically canceled the following actions will take place 1\ if the invoice has been partially paid before, we will automatically refund the invoice and then cancel the associated credit memos 2\ if the invoice has been applied to credit memos, we will automatically unapply the credit memos and then write off the remaining balance to ensure the invoice balance is 0 and the payment status is "written off " 3\ if the invoice status is "partially written off," we will automatically write off the remaining balance and then process the cancellation implementation guide api doc https //api docs nue io/#write off invoiceswebhooks docid z6xbd98qskku1fifbj5y when an invoice is written off, an invoice writeoffwebhook event is raised with the payload containing the invoice and invoice items error handling when the invoice is not 'active' or the balance is not 0, write off the invoice is not allowed docid 68c7d42a84474c73783b9d14b9b822581b145aac