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Experienced Member

Invoicing

Hello! I have a couple of customers who are not paying their invoice and therefore need to take a loss on them. How do I document this in Quickbooks? Thanks in advance!

1 Comment
QuickBooks Team

Re: Invoicing

I've got you covered, Kfasthoff.

 

We have just the steps that'll help record the bad debt. Let me walk you through the entire process:

 

Create an account for the bad debt

  1. Click the Gear icon and choose Chart of Accounts.

  2. Select New.

  3. From the Account Type drop-down list, select Expenses.
  4. From the Detail Type drop-down list, select Bad Debts.
  5. Name the account, for example, Bad Debt.

  6. Select Save and close.

Create a Product/Service item

  1. Click the Gear icon.

  2. Select Products and Services.

  3. Click New.

  4. In the Product/Service information panel, select Non-inventory.

  5. Name the item, for example, Bad Debt Item.

  6. In the Income account field, select the Bad Debt expense account you created.
  7. Clear the Is taxable checkbox.

  8. Click Save and close.

Create a credit memo for the bad debt

  1. Click the Plus (+) icon.

  2. Choose the customer from the Customer drop-down list.

  3. In the Product/Service field, select the Bad Debt item you created.
  4. Enter the Amount as a positive number.
  5. In the Memo field, enter Bad Debt.
  6. Select Save and close.

Apply the credit memo

  1. Click the Plus (+) icon.

  2. Under Customers, choose Receive Payment.

  3. Select the customer from the Customer drop-down list.

  4. In the Outstanding Transactions section, select the invoices to write off.
  5. In the Credits section, check the Credit Memo you created.
  6. Make sure the Amount received is 0.00.
  7. Click Save and close.

All of this information and more is available in our guide on how to write off bad debt.

 

That should do it. With these resources, I'm confident that you'll be able to document this like a pro in no time!


Please keep in touch if you need further assistance with this, or if there's anything else I can do for you. Thank you for reaching out, wishing you and your business all the best.