Dunning & Bad Debt


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.


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.


Required parameters

datethe calendar date of when the invoice become uncollectible
amountthe uncollectible amount

Required accounts

bad_debit_accounte.g. Cash
ar_accounte.g. Account Receivable
revenue_accounte.g. Revenue, or Deferred Revenue


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.

DateAccountDebit AmountCredit Amount
10/01/2022Account Receivable1,000

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.

DateAccountDebit AmountCredit Amount
10/18/2022Bad Debt1,000
Account Receivable1,000