voiding invoice without deducting revenue

It's great to see your commitment to maintaining an accurate financial picture of your business, @RavinN. I want to ensure you have a solution for canceling or writing off uncollectible invoices in QuickBooks Online (QBO).

Considering your existing bad debt provision, you can create a credit memo using a bad debt non-inventory item to apply to an invoice. You can use this method for the uncollectible invoices ensuring the recognized revenue remains unchanged while increasing the bad debt expense in your Profit and Loss (P&L) report. I'll detail the steps below.

Since you have an existing bad debt expense account, let's start by creating a non-inventory item as a placeholder for the bad debt. This item helps balance the accounting.

1. Go to the Gear icon and select Products and services.
2. Click on the New on the upper right. Then, choose Non-inventory.
3. In the Name field, enter Bad debts.
4. From the Income account drop-down list, select the bad debt expense account.
5. Select Save and Close.

Next, create a credit memo to record the bad debt against the customer accounts.

1. Select + New. Then, choose Credit memo.
2. Select the customer from the Customer drop-down list.
3. In the Product/Service section, select Bad debts.
4. In the Amount column, enter the amount you want to write off.
5. In the Message displayed on statement box, enter Bad Debt.
6. Select Save and Close.

Finally, apply the credit memo to the unpaid invoice to close it in the system.

1. Select + New. Then, click on Receive payment.
2. From the Customer drop-down list, select the appropriate customer.
3. From the Outstanding Transactions section, select the invoice/s for the payment determined as uncollectible.
4. Scroll down to the Credits section. Then, place a checkmark for the corresponding credit memo.
5. Select Save and Close.

Once you're done writing off the uncollectible invoices, you can pull up the P&L and A/R Aging reports to verify that revenue remains recognized correctly. If necessary, adjust your allowance for doubtful accounts via a journal entry – consult with an accountant to ensure accurate recording. You can also seek expert advice on our Find an Accountant website to help create the entry.

When you're ready to close out the year, here's a helpful article to guide you through year-end closing procedures and to prepare your business for the coming year: Year-end guide for QuickBooks Online.

We'll be here in the Community if you have more questions about recording bad debt in QBO. We're committed to offering ongoing support. Take care.