Question:

My customer is a bad debt, how do I process this?

Answer:

Various ways - some easier than others. Also please refer to your accountant or financial advisor.
The easiest way is to issue a credit note.
An alternate way is to pass a journal. Go to JOURNALS/EDIT JOURNALS. Choose DEBTORS.
Then ADD a transaction. Because your intention is to DECREASE debtors, use a negative value, being the amount of the bad debt. Use a description like "Bad Debt written off". When adding the transaction, include the CONTACT, as well as the Invoice Number being written off. The CONTRA account for this transaction is INCOME, and then remember to include VAT, so that also decreases your VAT liability.
NB. It may be necessary to create an account called BAD DEBT WRITTEN OFF, and allocate the various journal entries via this new account.
Our approach is not to complicate the issue, but if your accountant or financial advisor wants it this way, ask him/her to call us.