---
title: "Bad Debts | Marlin Bookkeeping"
slug: "bad-debts"
description: "Learn about writing off bad debts in Marlin Tyre and Mechanical Workshop Software by Megabus."
tags: ["Marlin Connect"]
updated: 2025-03-12T00:52:24Z
published: 2025-03-12T00:52:24Z
canonical: "help.megabus.com.au/bad-debts"
---

> ## Documentation Index
> Fetch the complete documentation index at: https://help.megabus.com.au/llms.txt
> Use this file to discover all available pages before exploring further.

# Bad Debts

**Marlin Tyre and Mechanical Workshop Software** enables bad debts to be written-off and allocated using the Journal Entry and Customer Payments modules.

If attempting to collect debts becomes impractical or futile, they are usually written off as losses.

This situation can occur due to various reasons, such as the customer declaring bankruptcy, undergoing financial hardship or simply refusing to pay.

Once a bad debt has been written-off, you will also need to [clear the relevant customer's account](/docs/bad-debts#clearing-bad-debts-from-customer-accounts) by performing a zero-dollar allocation.

          Tip

          

When writing off bad debts, it might also be a good idea to [change the relevant customers' account statuses to **Credit Hold**](https://help.megabus.com.au/docs/customer-accounts#general-customer-account-details) to prevent incurring further liabilities.

## Writing-Off Bad Debts

If a bad debt is deemed irrecoverable, you will need to transfer its balance to the Bad Debts account using the **Journal Entry** module (which can be accessed by selecting Daily Activity > Journal Entry from the menu bar).

          Note

          

Since GST is paid on any invoices raised, even if they are still outstanding, you are also entitled to receive a refund/credit for any GST paid on a bad debt, which can be transferred to the **GST Collected Adjustments** account using the same journal entry.

Click on the **Add** button to the top right of the module window, to add a new journal.

In the **Details** tab:

- Select the **Accounting Date**
- Enter a description in the **Notes** textbox  

(eg. "Bad Debt w/off ABC Pty Ltd Inv 12345")

In the **Details** list below:

- Click on the **+Account Button**
- Select the **Bad Debts** account
- Enter the amount to be written off in the **Debit** column (**excluding GST**)

To add a customer line, click on the **+Customer** button.

In the **Edit Detail** pop-up that opens:

- Select the **Customer** and **Payment Terms**
- Enter a **Customer Reference** (if required)
- Click **Ok** (bottom right)

Enter the amount being written off in the **Credit** column (**including GST**)

### Bad Debt GST Adjustments

#### Daily Activity > Journal Entry > [Journal]

A GST adjustment can be added to a bad debt journal by adding an additional tax line for the **GST - Tax Collected Adjustments** account.

Click on the **+Tax** button to the top-right of the Details list.

The **Edit Detail** pop-up will open:

- **Tax Code:** GST
- **Tax Activity Type:** Collected Adjustments
- Click **Ok** (bottom right)

In the **Debit** column, enter the GST amount from the original invoice(s).

### Committing Bad Debt Journals

#### Daily Activity > Journal Entry > [Journal]

Once you have checked that all the information for the bad debt is accurate, the journal can be committed, as usual, by clicking on the **Commit** button at the top-right of the module window.

## Clearing Bad Debts from Customer Accounts

Once the bad debt journal has been [committed](/workshop/docs/bad-debts-2#committing-bad-debt-journals), you need to clear the relevant customer's account by performing a [zero-value customer payment](https://help.megabus.com.au/docs/customer-account-payments#zero-value-customer-payments).

The **Customer Payments** module can be accessed by selecting **Daily Activity > Customer Payments** from the menu bar.

To add a new payment, click on the **Add Button** at the top-right of the module window.

In the **Payment** tab:

- Select the appropriate **Customer**
- Click on the **Allocations** tab (at the top).

In the **Allocations** list:

- Enter the **Payment Amount** as "0" (at the top)
- Click in the **Allocation** cell for the bad debt journal
- Press Enter on the keyboard to **allocate the total amount as a credit**.

Allocate the credit amount against the outstanding transactions until they are exhausted and the total is **$0**.

The payment can then be committed as usual, by clicking on the **Commit** button at the top-right of the module window.