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mindy14
Level 1

Is anyone here a cash basis service company?

I don't agree with the advice I'm getting about writing off uncollectible invoices here. If I have not recorded the income, I cannot record the bad debt expense. Does anyone have experience with this? How do you get the invoices out of your system without booking a bad debt expense?
5 Comments
Ryan_M
QuickBooks Team

Is anyone here a cash basis service company?

Hi @mindy14,

 

I'll take care of this query for you.

 

Short of deleting the invoices (which isn't advisable), there isn't another option to close these uncollectible invoices other than recording a bad debt. This ensures that your account receivables and net income remain updated and accurate. 

 

You can also consult your bookkeeper or accountant on how it would be best to proceed with recording these transactions.

 

If you have an accountant user in the company, you have them follow the steps listed in this article: Use write off invoices. This is an exclusive feature for accountants with a QuickBooks Online Accountant account. 

 

Feel free to come back and place a post here in the Community, if you have other questions. I'll get back to you as soon as I can. 

Rustler
Level 15

Is anyone here a cash basis service company?

@mindy14 

 

To start with if you were a cash based business, you would not have invoices that are waiting to be paid.

 

QB is accrual accounting, it only reports on cash basis if you require it to.

 

The procedure, or at least the concept to write off an invoice with a credit memo posting to bad debt expense is the correct one.

nikkit1
Level 1

Is anyone here a cash basis service company?

I would also appreciate help getting the rest of an invoice off my books, but since I am cash basis, I am not able to create a credit memo. A credit memo FORCES the revenue to show up in my books (because QB looks at a credit memo as a sort of a 'payment' and even calls it a 'payment' in the transaction list). I agree with the user that QB is more meant for accrual method accounting, but that doesn't work for our company!

 

nikkit1
Level 1

Is anyone here a cash basis service company?

I want to add that I suggest you delete the invoice or VOID it if you did not receive any payments on it already. I cannot void or delete it, since I DID receive one payment on it already.

GlinetteC
Moderator

Is anyone here a cash basis service company?

Hello, Nikki. I'd be glad to clear this up for you.

 

Voiding or deleting an invoice is something that you might need to consider. Both actions will take effect on the way your books are organized. By voiding an invoice, you cancel a particular payment. Also, it keeps the invoice number and list it in reports but changes the amount to zero. While deleting an invoice cancels a payment or the transaction itself.

 

I encourage checking out this article to learn more details and steps on voiding or deleting transactions in QBO.

 

Post again here if you need anything else managing your QuickBooks account. We're here to help.

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