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How do I write off an unpaid invoice?

Forum|Forum|7 years ago
December 11, 2018
6 replies
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Someone PLEASE hold my hand! I see all this advice to attach memos, etc. When I run a report or open the unpaid invoice my only option (as far as I can tell) is to receive payment and input a monetary amount in the amount paid block before I have the choice to write the unpaid balance off. I'm not going to get the unpaid balance so my only option I can see is to show a payment of at least 1 cent and then write off the remaining. I run a heavy equipment business and I'm good at that but not QB. Thanks for any clarification.

QuickBooks Desktop

Best answer by NOT MY USER ID

There are a couple of ways to write off bad debt (if you are on an accrual basis). This is what I do.

First, be sure you have recorded all attempts to collect the money, including your notes and any correspondence to the debtor.

Create a Bad Debt expense account in the chart of account if you don't already have one.
Create a non-inventory item in the Products and Services list called Bad Debt and select the bad debt expense account on the item screen.
Create a credit memo for that customer, using the bad debt item, enter the amount and save.
In receive payments, apply the CM to the invoice, save.

NOT MY USER IDAnswer

There are a couple of ways to write off bad debt (if you are on an accrual basis). This is what I do.

First, be sure you have recorded all attempts to collect the money, including your notes and any correspondence to the debtor.

Create a Bad Debt expense account in the chart of account if you don't already have one.
Create a non-inventory item in the Products and Services list called Bad Debt and select the bad debt expense account on the item screen.
Create a credit memo for that customer, using the bad debt item, enter the amount and save.
In receive payments, apply the CM to the invoice, save.

C

CommonGroundWorksAuthor

Thanks for the help. I have the Bad Debt expense account and just created a non-inventory one. Now how do I create the credit memo? When I open the invoice and go to apply credits it doesn't let me input any data. Is there another place to create the credit memo?

qbteachmt

I prefer an Other Charge type item for write offs, since I use noninventory items for real work.

D

Diane1308

I cannot make a credit memo - it gives me an error " can't have a negative value" - suggests I make a credit invoice. No clue what to do now. I never saw "credit invoice". Why does QB have to be so frustrating? Thank you for any help you can give! I've spent an hour already trying to get an answer.

J

JonpriL

Hi @Diane1308,

I completely understand where you're coming from and I know how it feels when you're experiencing errors when working in a certain task. I'm here to share a few insights you can consider in creating your credit memo.

First off, you can simply create receive payment transaction without selecting your outstanding invoices. This way. it'll create a credit memo for your customer.

That being said, here's how you can create a credit memo from the receive payment window:

Go to Customers.
Select Receive Payments.
Under RECEIVED FROM, choose your customer.
From the PAYMENT AMOUNT field, enter the amount.
Click Save & Close.
Select OK.

In addition, you can check the screenshot I've added below for your visual reference.

As always, You can visit our Help Articles page for QuickBooks Desktop if in case you need to learn some "How do I" steps.

I'll be always my pleasure to help if you have any other questions. I'll be keeping an eye for your response.

D

Diane1308

Thank you for taking time to reply. I needed to make a credit memo (per QB suggestions), was to write off an unpaid invoice. And QB won't let me write a credit memo. So I'm still not understanding how to "write-off" a bad debt. Thank you.

R

rcoiteux1

I'm lost. I have a customer that has not paid me and I have to take her to court. I followed the instructions for bad debt in the customer payment page. My question I can't seem to find an answer for, WHAT account do you select for DEPOSIT TO field?

J

JonpriL

Hello @rcoiteux1,

You don't have to worry about the account used to deposit the payment for a bad debt invoice. Bad debt is designed to close out invoices from customers with whom you didn't receive any payment with.

For an in-depth discussion about these invoices, here's an article you can read to learn more: Write off bad debt in QuickBooks Desktop.

On top of that, I've also included this reference for a compilation of articles you can read while working with us: The different transactions you can use to track your sales.

If there's anything else that I can help you with, please let me know in the comments below. I'll be here to lend a hand.

Youdeline laurint

@CommonGroundWorks wrote:
Someone PLEASE hold my hand! I see all this advice to attach memos, etc. When I run a report or open the unpaid invoice my only option (as far as I can tell) is to receive payment and input a monetary amount in the amount paid block before I have the choice to write the unpaid balance off. I'm not going to get the unpaid balance so my only option I can see is to show a payment of at least 1 cent and then write off the remaining. I run a heavy equipment business and I'm good at that but not QB. Thanks for any clarification.

L

LeizylM

I'll help you in writing off the balances of your invoices in QuickBooks, Youdeline laurint.

I know how it is important to record correctly all of your transactions in QuickBooks. When invoices you send in QuickBooks Desktop become uncollectible, you need to record them as a bad debt and write them off.

Here's how to add an expense account to track the bad debt:

Go to the Lists menu.
Select Chart of Accounts.
Click the Account menu at the bottom left, then select New.
Select Expense, then Continue.
Enter an Account Name.
Click Save and Close.

Once done, we can start over to close out the unpaid invoice.

Go to the Customers menu.
Select Receive Payments.
Enter the name of the customer in the Received from the field.
For the Payment amount, enter $0.00.
Select Discounts and credits.
In the Amount of Discount field, enter the amount you'd like to write off.
For Discount Account, select the bad debt account, and select Done.
Click Save and Close.

In addition, you can check the customer's open balances by going to the Reports menu and selecting Customers & Receivables. Then, click A/R Aging Detail.

I'm also adding these resources that can guide you manage your reports in QuickBooks:

I’m happy to offer assistance again if you have any other concerns or questions about invoices in QuickBooks Desktop. Post a new thread or reply here and I’ll be there.

Daniela_A

Thanks for keeping in touch with us @mbell19.

Ideally, the steps provided by my colleague above is the correct process in writing off a bad debt. Since QuickBooks has its own method to solve cases like yours, I would suggest working with your accountant to properly sort out this kind of matter. If you don't have an accountant, we can help you locate a ProAdvisor in your local area.

In addition, I've also included this reference for a compilation of articles you can read while working with us: The different transactions you can use to track your sales.

If there's anything else you need, please let me know. I'd be more than willing to lend you a hand.

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