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Level 1

How do I write off a credit balance for a customer?

 
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Best answer December 10, 2018

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Level 2

How do I write off a credit balance for a customer?

First of all a word of warning.  I am not sure where you are located, but most states in the US have what are called Escheat Laws that technically say you can't write off customer over payments without some real reason to do so and after so long if the customer does not use it then you need to remit it to the state.  You can Google Escheat or Escheatment Laws for your state to learn about the requirement.

With that said, people often do write of balance for many legitimate reasons.  I would have a non-inventory item set up that goes to the correct income account you want it to go to.  For example, misc income or something like that.  Invoice the customer for that item setting the amount to the amount of the credit you want to write off.  Go to receive payment from customer, select that invoice you just set up and then apply the credit to net the two against each other.

Hope that helps.

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4 Comments 4
Highlighted
Level 2

How do I write off a credit balance for a customer?

First of all a word of warning.  I am not sure where you are located, but most states in the US have what are called Escheat Laws that technically say you can't write off customer over payments without some real reason to do so and after so long if the customer does not use it then you need to remit it to the state.  You can Google Escheat or Escheatment Laws for your state to learn about the requirement.

With that said, people often do write of balance for many legitimate reasons.  I would have a non-inventory item set up that goes to the correct income account you want it to go to.  For example, misc income or something like that.  Invoice the customer for that item setting the amount to the amount of the credit you want to write off.  Go to receive payment from customer, select that invoice you just set up and then apply the credit to net the two against each other.

Hope that helps.

View solution in original post

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Level 1

How do I write off a credit balance for a customer?

these are credit balances that we are not 100% sure are legit credits due to possible duplicate CMs, high turnover of personnel, and well over one year
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Level 2

How do I write off a credit balance for a customer?

Like I said there are definitely reasons to write off old balances.  Also, I know that many states that are looking for additional revenue have been going after these old credit balances and did not want you to say I did not mention that.

If it was me, especially if the amounts are not material I would simply clean them up as I said above coding them to misc income so you have a clean sheet to start with going forward.
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Level 2

How do I write off a credit balance for a customer?

In my case I finally figured out why I have credits for customers who I know never ended up paying us in the first place! When I would be crediting an invoice because I knew the customer was never going to pay us the rest (after paying the diagnostic fee) I would credit the total amount not realizing they'd already paid the prior fee on that invoice (for the diag portion) this would ultimately leave a negative balance as a credit for that name! Ugh...but that's a real thing...for us.

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