Value adjustments at a 30 June year-end

Aging must run from the net due date, not the posting date. The due date is the point at which the customer is in default; using the posting date adds the payment term to every item's apparent age and pushes items into higher brackets.

Item	Amount	Due date (30 days)	Days past due at 30 Jun 2025	Bracket	Adjustment
9000001	1,200,000	12 Mar 2025	110	10%	120,000
9000002	800,000	14 Jan 2025	167	10%	80,000
9000003	350,000	19 Feb 2024	497	policy 100%	see individual task

Correct flat rate on 9000001 and 9000002: EUR 200,000.

Consultant's posting-date basis: 9000001 is 140 days past posting (10%) but 9000002 is 197 days past posting, which falls in the 50% bracket → EUR 400,000 - an overstatement of EUR 320,000 on that item alone, before the third invoice.

Note also that 9000002 sits only 13 days below the 180-day boundary. Confirm the bracket definition in the value adjustment key (whether the boundary is 'more than' or 'from') and document it, because the year-end result moves by EUR 320,000 depending on that single day. Run the report as at the closing date, not the run date.

Why it is wrong. A value adjustment is a year-end valuation, not a permanent write-off. It must exist on the closing balance sheet and be reversed in the following period so that the receivable reappears at gross for the new year. The reversal date must therefore fall in the next fiscal year of this company code.

This company code's fiscal year runs 1 July – 30 June. 1 January 2025 lies inside fiscal year 2024/2025, so the adjustment is reversed four months before the balance sheet date it was meant to support. At 30 June 2025 the receivables are shown at gross and the P&L charge has disappeared - the opposite of the intended effect, and a finding in any audit.

Correct setting: reversal date 1 July 2025 (first day of fiscal year 2025/2026).

Verify the whole chain:

• The reversal posting period must be open for the account types involved before the reversal runs.
• The reversal must be generated by the same run (or explicitly post-dated), not left to be posted manually later.
• If the adjustment document has already been posted with the wrong reversal date, reverse the reversal or reset and re-run rather than posting a second adjustment on top - otherwise the same receivable is adjusted twice in the following year.

Individual versus flat rate. The flat-rate run applies one percentage per age bracket to the whole portfolio. 9000003 is an identified, individually assessed risk: it is in legal collection and EUR 150,000 is expected, so the expected loss is EUR 200,000, not the EUR 350,000 the 100% policy bracket would produce. Applying a portfolio percentage to an individually measurable item overstates the charge and cannot be defended. Keep 9000003 out of the flat-rate run (exclude it via the run's selection, or flag it so it is skipped) and post an individual value adjustment of EUR 200,000, with the legal file as documentation. The flat-rate run then applies only to the remaining, unassessed population.

Gross or net. The programme computes on the open item amount, which includes output VAT. That is correct, but only because the credit goes to a valuation allowance (contra-receivable) account and not against the customer account: the gross receivable and the VAT liability both stay on the balance sheet, and the balance sheet shows the receivable at its recoverable amount. Do not try to 'net out' the VAT inside the adjustment.

When VAT matters: on an actual irrecoverable write-off the receivable is dereferenced and the output VAT must then be corrected in the tax return. That is a separate, later transaction.