Individual value adjustment (IVA)

The specific bad debt allowance is a procedure used to Evaluation of individual requirementsif there are specific indications of an increased risk of default - e.g. in the case of debtors with payment arrears, ongoing insolvency proceedings or settlements. It differs from general bad debt allowances, which are based on general empirical values.

Individual value adjustment in SAP Business One

SAP Business One offers No automatic function to the EWB, but represents the necessary tools to map individual value adjustments manually and correctly:

1. recording via manual journal entry

The EWB is used in the module Financial accounting > Postings > Journal entry entered manually. The following booking methods are common:

Indirect method (recommended):

Formation of the EWB:

2451 Allocations to the individual value adjustment to the receivables adjustment account

Cancellation of the EMB in the event of improved creditworthiness or payment:
```
EWB account (e.g. 3670) to 2731 Income from reduction of EWB
```

Direct method:Posting directly to the receivables account (not recommended, as transparency is lost):
```
Expense for write-down of receivable on receivables account
```

2. labelling and documentation

Journal entries can be made with a Transaction code or booking text (e.g. "EWB 2025/Debtor XY").
For Year-end postings it is recommended to use the Period 13 for clear demarcation in reports.

3. use of "parked documents"

For checking and reconciliation purposes, postings can initially be saved as Parked journal entries create. These are taken into account in previews, but are not yet posted.

4. account examples (SKR 03)

2451Allocations to specific valuation allowances on receivables
2731Income from the reduction of the EWB
3670Specific valuation allowance for receivables

5. example: claim over € 5,000 with insolvency risk

Formation EWB (indirect, 100 %):

Debit: 2451 (setting EWB) € 5,000
Credit: 3670 (EWB account) € 5,000

Bad debt loss one year later (with VAT):

Debit: 3670 (EWB account) € 5,000
      1576 (sales tax) € 950
Credit: 1200 (debtor receivable) € 5,950

6. combination with lump-sum value adjustment

For receivables with clear risks, a EWB made.
The remaining receivables are valued at a flat rate if necessary.

summary

SAP Business One supports the individual value adjustment through manual journal entries, parked documents, posting codes and structured G/L account logic. However, the responsibility for correct valuation, method selection (direct/indirect) and tax treatment lies with the user or accountant. This enables the system to map individual risks transparently and on an accrual basis.