Write off can mean different things to different people, so we provide this article to help make some clarity around this 'Write off topic'
Method 1 - BEFORE the invoice has been issued to the Client
Amounts that are not yet billed to a client and before the invoice is finalised
for which you need to reduce from their billable amount either as a whole across the bill per line item on the bill
ie draft bill $100 but you are charging $80 therefore $20 is written off.
Method 2 - AFTER an invoice has been issued to the Client AND a balance remains outstanding
Amounts that have been billed to a client on a Finalised invoice for which you are willing to accept a lower amount as full payment
ie Client received a bill for $500 but you have agreed to accept $400 as full payment
Method 1 - Draft Bill only
This can be referred to as 'Mark downs' or 'Mark ups' either across the entire bill or on a per line item basis. Sometimes on a line item basis persons refer to this as 'BUT SAY'
As these billable entries on a draft bill are not technically billed as yet there is no ability to isolate any markdowns or markups to a GL code.
But you can run a report called 'Time & Fee Entries' report to show them. This report is available on the REPORTS>Billing menu.
Please ensure on the advanced tab that all layout options are turned off besides 'Show Entry Type Summary' as shown on screen shot below.
This will show you the amounts that have entered by 'Entry type' ie Adjustments, discounts, hourly or Fixed fee.
What are Adjustments
Adjustments are created where the total billable amount on the bill is different to the amount of time entries (fees) that have been added to the bill.
There is one line (fee entry/time record) for $523.00 on the draft bill, but you want to 'round the fee up' to $550.00 so in the FEES box on the left hand side of the draft bill you change it to $550. Therefore adjusting the total amount of the invoice. The same works in reverse for reductions, but you are offered to show this reduction as a 'discount' which is the same as using the 'discount' feature on the draft bill.
Method 2 - Finalised/Approved bill - BUT Remains Unpaid
This is only relevant for bills that have been issued to clients and are in the status of 'finalised' within Actionstep AND there is a balance remaining that is due and payable.
Depending on if you Use Xero will depend on the functionality you will choose
- With Xero - you must use CREDIT Note and apply the credit note as Xero does not support Fee reductions in this manner. It only supports Credit notes.
- Without Xero - you can use the WRITE OFF feature of Actionstep
Both features reduce the amount billable on the invoice. however the major difference is the write off functionality only reduces FEES owing and you cannot choose a GL Code for that reduction to show on the P&L (Income statement). Where as CREDIT NOTE you can choose any GL code and choose between FEES and DISBURSEMENTS.
Instructions on raising a credit note and applying a credit note can be found here Credit Notes