Closing out an invoice without full payment

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Bad debt is when a customer owes you money, but you can't collect it. They have a debt with you, but you know you aren't going to get paid. If your business uses accrual method accounting, you can sometimes write off this kind of debt as a deduction. You can learn more about bad debt from the Internal Revenue Service's website. I'd recommend reviewing their Topic no. 453, Bad debt deduction article.

When invoices become uncollectible, you'll need to record them as bad debt and write them off. This ensures your accounts receivable and net income stay up-to-date.

Initially, you can check your Aging Accounts Receivable Detail report to review other invoices or receivables that should be considered as bad debut.
 

Here's how:
 

1. In the left navigation bar, go to Reports, then find and open your Accounts Receivable Aging Detail report.
2. Check which outstanding accounts receivable should be written off.

Next, you'll need to create a bad debts expense account if you haven't yet:
 

1. Use the Gear icon, then go to Chart of accounts.
2. Click New and use your Account Type ▼ drop-down list to choose Expenses.
3. From the Detail Type ▼ drop-down, pick Bad debts.
4. In your Name field, enter "Bad debts.".
5. Select Save and close.

After your account's been created, you can create a bad debt item and credit memo, then apply the memo to your invoice.
 

I've also included a detailed resource about working with accounts receivable aging reports which may come in handy moving forward: Accounts receivable aging report - Definition, uses, & guide
 

Please feel welcome to send a reply if there's any additional questions. Have a lovely Friday!