A customer has paid me half their invoice and we have agreed they don't need the 2nd half. How do I remove the outstanding invoice? This isn't a bad debt?

Thanks for reaching out to the Community, Stu O.

In QBO, you can either create a journal entry or use discounts to write off small amounts. Since there’s an agreement with your client, I recommend consulting an accountant for further assistance.
They can guide you on how to handle this type of situation. This also ensures your customer records are in tip-top shape.  

We have collated resources to help you easily perform any processes in QBO. Choose the topic and click on the article to view the complete information: Self-help guides.

Don’t hesitate to post a comment below if you have other QuickBooks concerns. Please know the Community has your back, and I’m here ready to answer them for you.