Overview

Dunning refers to the process of attempting to capture a successful payment over a predefined period of time and number of tries. It is a process managed by payment processors.

If no successful payment is captured by the end of dunning process, payment processors often mark the invoice as uncollectible. When such situation happens, journal entries should be created to revert the recognized revenue and record bad debt.

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The dunning process is managed by payment processors. Leapfin does not change invoice status to "uncollectible" by counting payment attempts or tracking payment due date. Instead, Leapfin monitors status values in payment processor's system and derives the financial impact as the status change.

Configuration

Required parameters

Fields	Description
`date`	the calendar date of when the invoice become uncollectible
`amount`	the uncollectible amount

Required accounts

Account	Description
`bad_debit_account`	e.g. Cash
`ar_account`	e.g. Account Receivable
`revenue_account`	e.g. Revenue, or Deferred Revenue

Walkthrough

Restaurant owner John purchases ingredients from a food vendor every month. He authorizes a recurring payment transfer from his bank account. In Oct, John forgets to deposit into his bank account. The balance is too low for the payment.

Event #1: invoice is issued

On Oct 1st, John receives an invoice of $1,000 from the food vendor for the ingredients. The following journal entry is booked.

Date	Account	Debit Amount	Credit Amount
10/01/2022	Account Receivable	1,000
	Revenue		1,000

Event #2: invoice becomes uncollectible

On Oct 15th, the payment processor tries to capture the schedule payment. However, it fails because of insufficient balance. On Oct 16th and Oct 17th, the payment processor tries two more times, but not successful. On Oct 18th, the invoice is marked as uncollectible. The following journal entry is booked.

Date	Account	Debit Amount	Credit Amount
10/18/2022	Bad Debt	1,000
	Account Receivable		1,000