Record a Custody as a Bad Debt

If the remaining balance of an employee custody cannot be recovered, you can record it as a bad debt to transfer the remaining balance to the bad debt account and permanently close the custody. This guide explains when you can perform this action and what happens afterward.

Before You Begin

• The remaining balance of the custody must be greater than zero.
• The “Bad Debt” button will only appear when this condition is met.

Steps to Record a Custody as a Bad Debt

• From the main menu, click Finance.
• Select Employee Custodies.
• Open the required custody from the list.
• Click the status change button.
• Click “Bad Debt.”
• A confirmation message will appear: “Are you sure you want to record this custody as a bad debt?”
• Click “Confirm” to complete the action.

What Happens After Confirming?

Balance Transferred: The entire remaining balance is automatically moved from the employee custody account to the bad debt account under Expenses → Other Expenses in the chart of accounts.

Journal Entry Created: A journal entry is generated for this action and can be viewed from the “Transactions
“ tab on the custody view screen.

Status Updated: The custody status changes to “Bad Debt.”

Custody Locked: The custody becomes read-only. None of the following actions will be permitted:

• Editing any field in the custody.
• Deleting any field in the custody.
• Adding a new settlement line.
• Deleting any existing settlement line.

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