Closing out an invoice without full payment

Thanks for becoming part of the Community, Creative Pictures. I appreciate your detailed information.

Bad debt is when a customer owes you money, but you can't collect it. They have a debt with you, but you know you aren't going to get paid. If your business uses accrual method accounting, you can sometimes write off this kind of debt as a deduction. You can learn more about bad debt from the Internal Revenue Service's website. I'd recommend reviewing their Topic no. 453, Bad debt deduction article.

When invoices become uncollectible, you'll need to record them as bad debt and write them off. This ensures your accounts receivable and net income stay up-to-date.

Initially, you can check your Aging Accounts Receivable Detail report to review other invoices or receivables that should be considered as bad debut.
 

Here's how:
 

1. In the left navigation bar, go to Reports, then find and open your Accounts Receivable Aging Detail report.
2. Check which outstanding accounts receivable should be written off.

Next, you'll need to create a bad debts expense account if you haven't yet:
 

1. Use the Gear icon, then go to Chart of accounts.
2. Click New and use your Account Type ▼ drop-down list to choose Expenses.
3. From the Detail Type ▼ drop-down, pick Bad debts.
4. In your Name field, enter "Bad debts.".
5. Select Save and close.

After your account's been created, you can create a bad debt item and credit memo, then apply the memo to your invoice.
 

I've also included a detailed resource about working with accounts receivable aging reports which may come in handy moving forward: Accounts receivable aging report - Definition, uses, & guide
 

Please feel welcome to send a reply if there's any additional questions. Have a lovely Friday!

Hi, no this isn't "Bad Debt". That is too technical, time-consuming, and doesn't fit my business needs. I simply want to take it off. Is there another way of doing this?

Hello there, Creative Pictures. I understand that the invoice you need to close out isn't a bad debt. I also recognize you need the easiest way to track the invoice without the full payment in QuickBooks Online. Let me explain this further to you.

The steps outlined by your colleague are recommended for tracking uncollectible income, although they may seem complex. If you find them challenging, consider consulting your accountant for guidance or exploring alternative methods for recording them in QuickBooks Online.

You can also follow this page for a more tailored process of writing off bad debt: Write off bad debt in QuickBooks Online.

I'll be here if you need more assistance with your liabilities and expenses within QBO. Keep me noted by adding a comment below.

@Creative Pictures 

If you're on cash basis, reduce the invoice amount to the payment amount received.  If you're on accrual basis, create a Credit Memo that offsets the income on the invoice and then apply the credit memo to the invoice (New > Receive payment).