Write off bad debt in QuickBooks Desktop

Note: If you are using QuickBooks Online, the steps to write off bad debt are different.

If you are unable to collect payment from a customer, you must record the uncollectible amount as bad debt. This process clears the open balance from your accounts receivable and ensures your net income remains accurate.

Tip: You can monitor your customers' open balances using the Accounts Receivable Aging Detail report.

Step 1: Add an expense account to track the bad debt

Create a specific expense account to categorize these uncollectible amounts.

1. Go to the Lists menu and select Chart of Accounts.
2. Select the Account menu and then select New.
3. Select Expense, then select Continue.
4. Enter an Account Name (for example, Bad Debt).
5. Select Save and Close.

Step 2: Close out the unpaid invoices

Once the account is set up, record a zero-dollar payment to write off the specific invoice.

1. Go to the Customers menu and select Receive Payments.
2. Enter the name of the customer in the Received from field.
3. In the Payment amount field, enter $0.00.
4. Select Discounts and credits.
5. In the Amount of Discount field, enter the amount you want to write off.
6. For the Discount Account, select the account you added in Step 1, then select Done.
7. Select Save and Close.