Handling a Custody with a Remaining Balance
When an employee custodian has a remaining balance that cannot be fully settled, the system provides two options: returning the cash or recording the balance as a bad debt. This guide explains both options and how to reverse them if needed.
Option 1: Returning the Cash
If the employee returns the remaining balance in cash, record it as follows:
- From the main menu, click Finance.
- Click Employee Custody.
- Open the relevant custody from the list.
- Verify the remaining balance shown on the custody page.
- Click the Return Cash button.
- A confirmation message will appear: “Are you sure you want to settle the full remaining balance of this employee’s custody?”
- Click Confirm.
Once confirmed, the system automatically creates a journal entry transferring the remaining balance from the employee custody account to the designated cash or bank account, and the custody status changes to Settled.
Once confirmed, the system automatically creates a journal entry transferring the remaining balance from the employee custody account to the designated cash or bank account, and the custody status changes to Settled.
Reversing a Cash Return
If the custody was closed after a cash return and you need to undo it:
- From the closed custody’s view page, click Change Custody Status and select Undo Close.
- A confirmation message will appear: “Are you sure you want to undo the closed status? The custody will be restored to its previous state.”
- Click Confirm.
Upon reversal, the cash return journal entry is automatically deleted, the remaining balance is restored to the employee custody account, and the custody status returns to Open.
Option 2: Recording the Remaining Balance as a Bad Debt
If the remaining balance cannot be recovered from the employee, you can write it off as a bad debt:
- From the open custody’s view page, click on Custody Status and select Bad Debt.
- A confirmation message will appear: “Are you sure you want to record this custody as a bad debt?”
- Click Confirm.
The full remaining balance is automatically transferred to the bad debt account under other expenses, and the custody becomes read-only. You can review the related journal entries from the Transactions tab on the custody page.
Reversing a Bad Debt
If a custody was incorrectly recorded as a bad debt, you can reverse it:
- From the custody’s view page, click on Custody Status and select Reopen.
- A confirmation message will appear: “Are you sure you want to undo the bad debt status? The remaining balance will be restored to the employee advance account.”
- Click Confirm.
The bad debt journal entries are automatically deleted, the balance is restored to the employee custody account exactly as it was, and the custody status returns to Open.
Comparison Between the Two Options
| Return Cash | Bad Debt | |
|---|---|---|
| When to use | When the employee returns the balance in cash | When the balance cannot be recovered |
| Journal entry | Transferred to the cash or bank account | Transferred to the bad debt account |
| Custody status after | Settled | Bad Debt |
| Reversible | Yes, via Undo Closing | Yes, via Reopen |