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markfleming
January 6, 2021
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How to handle invoice with partial payments made, but then no more payment coming?

  • January 6, 2021
  • 1 reply
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I sell domain names, sometimes on an installment plan.  For an installment plan, I create the invoice for the entire amount and then each month apply a payment to it.  I have one sale on which I received the first six payments on, but then at the end of the year the buyer stopped paying. He's run out of money or something.  

 

The domain name has been transferred out of escrow back to me now.  So, I never really "sold" the name. I guess I kind of "rented" it.

 

So, now I have an invoice with partial payments on it.  I need to do something with that invoice.  One option is to go in and change the amount of the transaction to what was collected. And maybe then journal the "domain name sales" account to "domain name rentals."  But that all doesn't sound that elegant, I hate to change a transaction after the fact.

 

Any ideas what to do with this?

Best answer by markfleming

Thank you for getting back here, @markfleming.

 

To clarify, are you seeing that the invoice status is closed? or it's in line with the credit memo? If so, this means that the transaction is paid in full. Also, it's possible that the Automatically apply credits feature is turned on. When this feature is enabled, any credit will automatically be allocated to the next invoice assigned to the customer's account, as long as there are no older unpaid invoices. You might want to turn this off and follow the steps provided by my colleague, jamespaul to write off bad debts. 

 

Here's how:

  1. Go to the Gear icon and select Account and Settings.
  2. Select the Advanced tab and click Automation.
  3. Turn off the Automatically apply credits option.
  4. Hit Save when done.

 

Also, to get a list of all payments and invoices for each of your customers, you may pull up the Invoices and Received Payments Report. Then, customize it so it will only show the info you need. 

 

Feel free to get back here if you have further questions about managing invoices in QuickBooks. I'll be around to help you. Have a good one. 


Ha!  Before reading the last comment I googled on "can't see credit section" and learned about the  Automatically apply credits feature.  Mine was set to On and I switched it to Off.  Viola! The credit section showed up when I did the Receive payment.  

 

I applied the credit to the particular invoice of the customer and it seemed to work.  Later this morning when I have the time I'll check that everything looks good, which I imagine it does.

 

I want to compliment forum.  Unlike other product forums, you can actually get constructive help here, and not just general bot-like answers that don't really answer.  Thank you.

1 reply

R
Ryan_M
January 6, 2021

Hi @markfleming,

 

I'll share some insight on your situation about an invoice with partial payments on it.

 

An option I can suggest to you is to write off the remaining balance as bad debt. It's applicable for this situation since you're no longer able to collect the remaining amount from your customer. 

 

You'll need to create an expense account to track bad debts. Here's how:

 

  1. Highlight the Accounting tab.
  2. Select Chart of Accounts.
  3. Click New.
  4. Set the: 
    • Account Type to Expenses.
    • Detail Type to Bad debts. 
  5. Enter a name in the Name field.
  6. Hit Save and Close.

 

See this article to continue this process: Write off bad debt in QuickBooks Online. Scroll down to Step 3: Create a bad debt item.

 

You can also consult your bookkeeper or accountant on the best way to record the transaction you stated above. 

 

I'll share this article with you as well: Void or delete transactions in QuickBooks Online. It has a short description of when you can void or delete a transaction, as well as the steps on how you can do it on QuickBooks Online (QBO).

 

Don't hesitate to post a reply if you have other questions about your QBO company. I'll be sure to get back to you.

M
markflemingAuthor
January 6, 2021

Thanks for your prompt reply.  I completed steps 1,2, 3 and 4.   But I think I have an issue with 5.

 

In bullet point 5 below, I cannot find a "Credits section" to select the credit memo. Where is it?  Screencap attached of the only thing I see with the word "credit" and I can't click anything there. 

 

Step 5: Apply the credit memo to the invoice

1. Select + New.
2. Under Customers, select Receive payment or Receive invoice payment.
3. From the Customer ▼ dropdown, select the appropriate customer.
4. From the Outstanding Transactions section, select the invoice.
5. From the Credits section, select the credit memo.
6. Select Save and Close.



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