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Level 1


what do you do with an Account Receivable that will not be collected?

Kristine Mae


I'll help you manage the Accounts Receivable balances that you're unable to collect, Dcoulombe.


We'll have to write off the open invoices and declare them as bad debt. 


A bad debt is an expense that's also referred as uncollectible accounts. This is the result when you delivered items or provided services and the customer didn't pay the amount owed. 


First, let's add the expense account to track the bad debt. Here's how:

  1. Click Lists.
  2. Go to Chart of Accounts.
  3. Click Account, then select New.
  4. Select Expense, then click Continue.
  5. Enter a desired name (Example: Bad Debt).
  6. Click Save & Close


Then, let's go ahead and close out the unpaid invoices. Here's how:

  1. Click Customers, then go to Receive payments.
  2. Select the customer and the invoice.
  3. Enter 0 in the Payment field.
  4. Click Discounts and Credits
  5. Go to the Discount tab.
  6. Enter the amount in the Amount of Discount field.
  7. In the Discount Account field, select the bad debt account created earlier. 
  8. Click Done, then Save & Close





When you pull up the Profit and Loss report. The Bad Debt account will show with the invoice amount. Here's how:

  1. Click Reports.
  2. Go to Company & Financial.
  3. Select Profit & Loss Standard

Visit the Community if you have other concerns. We're open 24/7. 

Level 4


Whilst the suggested answer could work, it will not work for those that are VAT registered. You can create a credit note going to bad debts instead, this system may warn you that you are using an expense account but you can disregard that warning.

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