Processing a Write-Off

If you determine that a customer's balance is uncollectible then you can write the customer's balance off using the write-off program. When you perform a write-off, the customer's balance will be reduced to zero. You will still be able to track the amount of any deficiency balance or bankruptcy in the "Other Receivables" portion of the customer's file.

For dealers who pay sales tax up front, (as opposed to remitting sales tax when they receive payments), the program will calculate a credit for sales taxes on write-offs. The program calculates what percent of the original sale amount was taxable, and applies this same percentage to the amount written off to get the Sales Tax Credit.

For Example: Assume a write-off of $9,000, an original sales total was $15,000, of which $12,000 was taxable. (Sales tax was originally paid on $12,000.) The system calculates what percent of the original sales was taxable, in this case 80% (12,000 / 15,000) and applies that percent to the amount written off. So the credit would be 80% of the write-off amount of $9,000, or $7,200.

•	If a write-off is entered incorrectly, it can be deleted. Click here for more information: Deleting a Write-Off.

•	However, if the write-off was entered in a prior month, it is recommended that you reverse the write-off to ensure that your financial reports are correct. Reversing a write-off will create a reversing entry. Click here for more information: Reversing a Write-Off.

•	For a Write-Off Analysis, run report R-3-H in the System. It will display the amount written off, final Cash Position, and more for each of your write-offs.

•	For Georgia dealers only, Click Here for information about the write-off calculation when you intend to pursue a deficiency balance.

The system will allow you to enter as many classifications that you need to track your write-offs. Examples of classifications could be things such as Skip, Repo, Turn-In. Just add additional classifications when you need them.

If you are adding a car back into inventory during the write-off, you have 3 indicators for the mileage displayed on the odometer at that time.

•	Actual should be used to designate the actual mileage on the vehicle.

•	Excess can be used if the mileage on the odometer has already turned over.

•	Discrepancy can be used if you know that the mileage displayed on the odometer is not accurate.

Once a customer has been written off and now has a zero balance, the only way to access their file through the customer activity program is to change the "Display" option on the look up window from "Customers with a balance" to "All Customers". (This is true for all customers that have a zero balance whether they were written off or not.)

Multiple transactions may be entered into your customer's file when you enter a write-off. These are:

2.	Any unearned interest is removed from the customer's balance.

3.	The customer's balance is reduced by the value of any vehicle that was recovered.

4.	The customer's remaining balance, after accounting for the unearned interest and the value of a recovered vehicle, is written off.

If you will be pursuing a deficiency balance and you had been using the Rule of 78s method to earn interest, then you must change your interest calculation method to straight line before doing the write-off. This will increase your unearned interest, if any, and thereby reduce the amount that your customer owes you. Changing the interest earned method may also result in a "negative interest earned" on your write-off.

•	Select the customer for which you want to process the write-off.