Hi all,

I have a SaaS specific question with regards to non-payment/bad debt.  A client was invoiced 6 months ago for an Annual Prepaid Subscription (so a liability that turns into earned revenue each month). We completed onboarding and various other deliverables but have received no payment. We've decided it's not going to be paid. Let's say it was $4000 plus GST.

This is what I was thinking:

- going into Sales and creating a WRTOFF invoice under the client

- write off as Bad Debt 6mths ($2000) and reverse the prepaid subcription account for 6mths ($2000) (and reverse the GST while doing both). If I don't reverse the Prepaid Sub liability, I will have to continue to recognize $333.33 as Earned Sub Revenue for another 6 months.

Does this sound like the best approach? Any other suggestions from those of you with SaaS/prepaid revenue experience?

Thank you!

Marcie