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biz5
January 7, 2021
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My client paid my vendor directly. What to do with Accounts Receivable that I created for the client on QB? Should I just write it off?

  • January 7, 2021
  • 1 reply
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Original commenter did not share additional details
Best answer by Rubielyn_J

Let me clarify things, @Just_me and @biz5.

 

When invoices you send in QuickBooks become uncollectible, you need to record them as a bad debt and write them off. Bad debt means a customer owes you money but you can't collect it. This ensures your accounts receivable and net income stay up-to-date.

 

To start, create a bad debt expense account.

  1. Select the Settings ⚙ and then choose Chart of Accounts.
  2. At the upper right, click New to create a new account.
  3. From the Account Type ▼ dropdown, choose Expenses.
  4. From the Detail Type ▼ dropdown, select Bad debts.
  5. In the Name field, enter Bad debts.
  6. Once done, click Save and Close.

Then, create a non-inventory item as a place holder for the bad debt. After, create a credit memo for the bad debt. Here's how: 

  1. Click + New.
  2. Choose Credit memo or Give credit.
  3. Select the customer from the Customer ▼ drop-down.
  4. In the Product/Service section, click Bad debts.
  5. In the Amount column, enter the amount you want to write off.
  6. In the Message displayed on statement box, enter Bad Debt.
  7. Click Save and Close.

Lastly, apply the credit memo to the invoice

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

I've also added this article that can guide you void transactions in QuickBooks Online: Delete invoices, expenses, and other transactions.

 

Let me know if you have other clarifications. I'll be around to answer your queries. Have a great day.

1 reply

N
Nick_M
January 7, 2021

Hey there, biz5.

 

Thanks for dropping by the Community I'm happy to help. Below are the steps you can follow to record your clients payment to the vendor directly. 

  1. Select + New.
  2. Select Receive Payment.
  3. From the Customer dropdown, select the name of the customer.
  4. From the Payment method dropdown, select the payment method.
  5. From the Deposit to dropdown, select the account you put the payment into. Tip: You can put the money directly into an account, like your checking account, or select Undeposited funds if you need to group the payment with others. .
  6. In the Outstanding Transactions section, select the checkbox for the invoice your recording payment for.
  7. Enter the Reference no. and Memo if needed. This is optional.
  8. When you're done, select Save and close.

You can also check out this helpful article for further clarification and advice. I also recommend having an accountant look over your books, that way you can be sure everything is accurate and as it should be. If you need an accountant or want to see if there are any in your area that are also certified experts in QuickBooks you can check out our find an accountant tool.

 

If there's anything else I can do to help, feel free to post here anytime. Thanks and I hope you have a wonderful afternoon.

J
Just_me
January 7, 2021

That doesn't sound right, at all.  @Nick_M , WHY would you record a payment to someone else, in your own QB?  That makes NO sense.  

Rubielyn_J
Rubielyn_JAnswer
January 7, 2021

Let me clarify things, @Just_me and @biz5.

 

When invoices you send in QuickBooks become uncollectible, you need to record them as a bad debt and write them off. Bad debt means a customer owes you money but you can't collect it. This ensures your accounts receivable and net income stay up-to-date.

 

To start, create a bad debt expense account.

  1. Select the Settings ⚙ and then choose Chart of Accounts.
  2. At the upper right, click New to create a new account.
  3. From the Account Type ▼ dropdown, choose Expenses.
  4. From the Detail Type ▼ dropdown, select Bad debts.
  5. In the Name field, enter Bad debts.
  6. Once done, click Save and Close.

Then, create a non-inventory item as a place holder for the bad debt. After, create a credit memo for the bad debt. Here's how: 

  1. Click + New.
  2. Choose Credit memo or Give credit.
  3. Select the customer from the Customer ▼ drop-down.
  4. In the Product/Service section, click Bad debts.
  5. In the Amount column, enter the amount you want to write off.
  6. In the Message displayed on statement box, enter Bad Debt.
  7. Click Save and Close.

Lastly, apply the credit memo to the invoice

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

I've also added this article that can guide you void transactions in QuickBooks Online: Delete invoices, expenses, and other transactions.

 

Let me know if you have other clarifications. I'll be around to answer your queries. Have a great day.

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