How do I handle write-offs?
A write-off removes an invoice from your accounts receivable. Typically, you can use write-offs when you do not believe that your customer will make payment for an invoice.
A write-off is usually one of the final steps in a collections or dunning process where you would like to manage customers that do not make timely payments. As part of a collections process, the customer's subscription is often cancelled so that additional services are not provided. The remaining open invoices must be written off to clean up accounts receivable.
Invoice Item Adjustments: Use an Invoice Item Adjustment to create a separate transaction using the accounting code and service period from the invoice item. If you are managing revenue recognition, Zuora recommends that you use the Invoice Item Adjustment because it allows you to negate any revenue impacts from the invoice item.
With either option, Zuora recommends that you use a custom field on either the Invoice Item Adjustment for reporting purposes. For example, you can create a custom field named
Reason with the values
Customer Service Credit, or
Refund, depending on your business rules, and then set this value to
Write-off to track your write-offs for a given period.
You can also enter notes into the Invoice Item Adjustment if you have additional information that you want to associate with the write-off.