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markfleming
Level 2

I sell domain names, sometimes on an installment plan.  For an installment plan, I create the invoice for the entire amount and then each month apply a payment to it.  I have one sale on which I received the first six payments on, but then at the end of the year the buyer stopped paying. He's run out of money or something.  

 

The domain name has been transferred out of escrow back to me now.  So, I never really "sold" the name. I guess I kind of "rented" it.

 

So, now I have an invoice with partial payments on it.  I need to do something with that invoice.  One option is to go in and change the amount of the transaction to what was collected. And maybe then journal the "domain name sales" account to "domain name rentals."  But that all doesn't sound that elegant, I hate to change a transaction after the fact.

 

Any ideas what to do with this?

Solved
Best answer January 07, 2021

Best Answers
markfleming
Level 2

Ha!  Before reading the last comment I googled on "can't see credit section" and learned about the  Automatically apply credits feature.  Mine was set to On and I switched it to Off.  Viola! The credit section showed up when I did the Receive payment.  

 

I applied the credit to the particular invoice of the customer and it seemed to work.  Later this morning when I have the time I'll check that everything looks good, which I imagine it does.

 

I want to compliment forum.  Unlike other product forums, you can actually get constructive help here, and not just general bot-like answers that don't really answer.  Thank you.

View solution in original post

11 Comments
Ryan_M
QuickBooks Team

Hi @markfleming,

 

I'll share some insight on your situation about an invoice with partial payments on it.

 

An option I can suggest to you is to write off the remaining balance as bad debt. It's applicable for this situation since you're no longer able to collect the remaining amount from your customer. 

 

You'll need to create an expense account to track bad debts. Here's how:

 

  1. Highlight the Accounting tab.
  2. Select Chart of Accounts.
  3. Click New.
  4. Set the: 
    • Account Type to Expenses.
    • Detail Type to Bad debts
  5. Enter a name in the Name field.
  6. Hit Save and Close.

 

See this article to continue this process: Write off bad debt in QuickBooks Online. Scroll down to Step 3: Create a bad debt item.

 

You can also consult your bookkeeper or accountant on the best way to record the transaction you stated above. 

 

I'll share this article with you as well: Void or delete transactions in QuickBooks Online. It has a short description of when you can void or delete a transaction, as well as the steps on how you can do it on QuickBooks Online (QBO).

 

Don't hesitate to post a reply if you have other questions about your QBO company. I'll be sure to get back to you.

markfleming
Level 2

Thanks for your prompt reply.  I completed steps 1,2, 3 and 4.   But I think I have an issue with 5.

 

In bullet point 5 below, I cannot find a "Credits section" to select the credit memo. Where is it?  Screencap attached of the only thing I see with the word "credit" and I can't click anything there. 

 


Step 5: Apply the credit memo to the invoice

1. Select + New.
2. Under Customers, select Receive payment or Receive invoice payment.
3. From the Customer ▼ dropdown, select the appropriate customer.
4. From the Outstanding Transactions section, select the invoice.
5. From the Credits section, select the credit memo.
6. Select Save and Close.




markfleming
Level 2

I've gone to Step 5 and am stuck.  On bullet point 5 of Step 5, I cannot find the "Credit Section" in order to select the credit memo. Screenshot attached of the only place I see the word credit.

 

Step 5: Apply the credit memo to the invoice

 

1. Select + New.
2. Under Customers, select Receive payment or Receive invoice payment.
3. From the Customer ▼ dropdown, select the appropriate customer.
4. From the Outstanding Transactions section, select the invoice.
5. From the Credits section, select the credit memo.
6. Select Save and Close.

Pabz_L
QuickBooks Team

I appreciate you for following the steps given, @markfleming.

 

I suggest checking the customer's name. Then, review the invoice or receivables that should be considered as bad debt using the Accounts Receivable Aging Detail report.

If you already check it and all are correct, I suggest contacting our support team. They have the proper tools to identify what’s causing this issue. 

 

 You can also check this article for your future reference: Enter and apply a credit memo or delayed credit.

 

Pleas e let me know how it goes. I want to make sure that this issue is taken care of. Have a good one.

markfleming
Level 2

I found the credit memo I created and it is correct, matching the customer.  I followed your link and watch this video . It didn't match exactly what the steps shown to me above said to do.  The video says when creating the credit memo to put in the Product/Services field the same one that I want to credit in the original invoice.  In my case, that is "Domain Sales.:  However, in the steps given to me , in Step 4, Bullet 4, it says to select "Bad Debts".  These conflict.

 

Could this be the problem?

 

And if I can't figure out how to make this work (not calling customer support), can I just delete the credit memo and find my own way to hack through this?

jamespaul
QuickBooks Team

Hello, Mark Fleming. 

 

Yes, that's actually what's creating the conflict. You'll only want to select the Bad Debts item you've created on the credit memo. I'll continue the steps and walk you through in recording the transaction. 

 

I've reviewed your previous replies. It looks like you've already created the Bad Debt expense account and have it linked to a non-inventory item. Now, looking back to your recent post, I take that you've already created the credit memo and linked your Domain Sales to it.

 

In this case, let's delete and recreate it: 

 

  1. Open the credit memo.
  2. Click the More menu at the bottom.
  3. Hit Delete

 

bad1.PNG

 

Next, recreate it with the Bad Debt item added:

 

bad2.PNG

 

Now, let's apply the credit memo on the invoice for the remainder of the unpaid service: 

 

  1. Click the + New button, then choose Receive payment
  2. Under Outstanding Transaction, check the unpaid invoice.
  3. For Credits, check the credit memo. 
  4. Add a memo such as "Bad debt" or "Customer not paying."
  5. Add other important information.
  6. Once done, click Save and close

 

bad3.PNG

 

You can follow Step 6 from this article to view a report for all the bad debt records created. I would also suggest following the last note at the bottom of the article to track and identify a customer as "bad debt entity."

 

Now that's out of the way, need to view reports to check your sales within a specific period? This article can guide you through the process of creating them: Use reports to see your sales and inventory status.

 

Reach out to me if you have more questions. I'd be more than happy to show you a guide or two in accomplishing your tasks. 

markfleming
Level 2

That still does not work for me.  There continues to be no Credit section when I try to apply the credit I've credited.

 

After deleting the Credit Memo and creating the new one, I ended up with the exact same credit memo as before.  Your instructions were exactly the steps I followed before.

 

By the way, after creating the credit memo, I see it had a status of "closed" on the Customer's Page for this customer, if that is meaningful to you.

DivinaMercy_N
QuickBooks Team

Thank you for getting back here, @markfleming.

 

To clarify, are you seeing that the invoice status is closed? or it's in line with the credit memo? If so, this means that the transaction is paid in full. Also, it's possible that the Automatically apply credits feature is turned on. When this feature is enabled, any credit will automatically be allocated to the next invoice assigned to the customer's account, as long as there are no older unpaid invoices. You might want to turn this off and follow the steps provided by my colleague, jamespaul to write off bad debts

 

Here's how:

  1. Go to the Gear icon and select Account and Settings.
  2. Select the Advanced tab and click Automation.
  3. Turn off the Automatically apply credits option.
  4. Hit Save when done.

 

Also, to get a list of all payments and invoices for each of your customers, you may pull up the Invoices and Received Payments Report. Then, customize it so it will only show the info you need. 

 

Feel free to get back here if you have further questions about managing invoices in QuickBooks. I'll be around to help you. Have a good one. 

markfleming
Level 2

Ha!  Before reading the last comment I googled on "can't see credit section" and learned about the  Automatically apply credits feature.  Mine was set to On and I switched it to Off.  Viola! The credit section showed up when I did the Receive payment.  

 

I applied the credit to the particular invoice of the customer and it seemed to work.  Later this morning when I have the time I'll check that everything looks good, which I imagine it does.

 

I want to compliment forum.  Unlike other product forums, you can actually get constructive help here, and not just general bot-like answers that don't really answer.  Thank you.

View solution in original post

markfleming
Level 2

Ha!  Before reading the last comment I googled on "can't see credit section" and learned about the  Automatically apply credits feature.  Mine was set to On and I switched it to Off.  Viola! The credit section showed up when I did the Receive payment.  

 

I applied the credit to the particular invoice of the customer and it seemed to work.  Later this morning when I have the time I'll check that everything looks good, which I imagine it does.

 

I want to compliment forum.  Unlike other product forums, you can actually get constructive help here, and not just general bot-like answers that don't really answer.  Thank you.

markfleming
Level 2

I've taken a look at things after applying the credit, and in fact did two different applications of a credit memo.  Everything looks great.

 

Thanks again for all the help!

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