At certain times during the life of a matter it will become necessary to reduce the amount owed to the firm by the client. If an amount becomes uncollectible (e.g., the client just will not pay) a WRITE OFF will be needed. Other times a decision will be made to reduce the actual amount charged as a courtesy– in this situation a DISCOUNT will be offered. Each is different and each has different tax ramifications – discuss the options with your firm’s CPA before proceeding. In the Abacus Accounting program there are two options for applying write offs (Complete and Partial) and one option for discounts.
Partial Matter Write Offs
If only part of a balance needs to be written off, then a manual adjustment can be entered using the Costs & Adjustments function.
- Navigate to Billing > Costs & Adjustments. The Costs & Adjustments window will appear.
- Click Add in the upper-right and the Costs & Adjustments – Add window opens.
Complete this screen as follows:
- Matter Number: Enter the matter number receiving the write off.
- Client Exp Code: Enter the code relating to the type of charge that is being written off:
- WHC – Write off of Hard Costs
- WOF – Write off of Fees
- WOL – Write Off of Late Charges
- WOT – Write Off of Sales Taxes
- WSC – Write Off of Soft Costs
Make sure that you are choosing the Client Expense Code that corresponds to the charge you are writing off. E.g. if you are writing off attorneys' fees, enter a WOF, but enter a WHC if you are writing off a hard cost (such as a filing fee). If you choose the incorrect expense code, this will cause your Accounts Receivable Report to show what the client owes incorrectly.
- Date – Enter the date of the write off. This is the date the entry will appear on the Matter Billing Activity.
- Amount – Enter the amount of the write-off.
- Description – Enter a brief explanation for the write-off.
- Debit/Credit – Select Credit
- Bill Type – Select Unbilled if you are going to generate another invoice for the client. Select Billed if you are NOT going to generate another invoice for the client (or do not want the client to see the write-off on their next bill).
- Write Off – Select YES if you would like this entry to appear on the Write-Off Report.
- Click the Done button. This will bring you back to the Cost & Adjustments screen.
- Highlight the write off that you added and then click the Post button.
Complete Matter Write Off
The Complete Matter Write Off function allows you to write-off the complete unpaid balance on a matter. ALL unpaid fees, costs, late charges and taxes, either billed or unbilled, will be written off. All unbilled time tickets can either be deleted from the system or left in the system and all hold flags removed from entries on the client ledgers. You should only use this option when there is no further work to be performed by the firm for this matter, and no way the funds will be received.
- Navigate to Matters > Complete Matter Writeoff.
- Complete the setting on the window as follows
- Write Off Date: The date the write off will be posted to the Matter Billing Activity (using an expense code of WOF, WHC, WSC, WOT, WOL ) with a Billed status. NOTE: if you are on an accrual based accounting system, you will also have to enter a posting date. This is the date the entry will post to the general ledger (the system will automatically create an entry using the accounts setup in the Default G/L Accounts for the Write Off and Receivable accounts).
- Matter: Select the matter to write off.
- Delete Unbilled Time Tickets: Check if you want to delete all unbilled time tickets for the matter. When unchecked, all unbilled time tickets for the matter will be left for possible future billing.
- Click the Write Off button
For more information on options for applying a discount to a matter, view this article: Applying Credits and Discounts to Matters.
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