cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

How do I write off an unpaid invoice?

Can you tell me how to do that in QBO?  Following the above it gave me a negative figure on the customer account.  

Highlighted
QuickBooks Team

How do I write off an unpaid invoice?

Welcome to the Community, @sbright11.

I can definitely walk you through on how to write off bad debts in QBO. Let me show you how:

 

Create an expense account and name it Bad Debt:

  1. Go to the Gear⚙ icon and then select Chart of Accounts.
  2. Click New on the upper right.
  3. Select Expenses from the Account Type▼.
  4. Choose Bad Debt from the Detail Type▼.
  5. Enter "Bad debts" in the Name field and then click Save and Close.

Create a bad debt item:

  1. Go to the Gear⚙ icon and then select Products and Services.
  2. Click New on the upper right and then Non-inventory.
  3. Enter “Bad debts” in the Name field.
  4. Select Bad debts from the Income account▼ and then hit Save and Close.

Create a credit memo for the bad debt:

  1. Go to + New on the upper left and then select Credit Memo.
  2. Under the Customer▼, select the customer.
  3. In the Product/Service, select Bad debts and then enter the amount to write it off.
  4. In the Message displayed on statement box, enter "Bad Debt" and then click Save and close.

You can now apply the credit memo to the invoice:

  1. Go to + New and then select Receive Payment.
  2. Select the appropriate customer from the Customer▼.
  3. Add the invoice from the Outstanding Transactions section.
  4. Select the Credit memo from the Credits section and then Save and close.

After these steps, you can run the bad debts report:

  1. Go to the Gear⚙ icon and then select Chart of Accounts.
  2. Select Run report in the Action column.

You can refer to this article on how to write off uncollected money: Write off bad debt in QuickBooks Online.


Refer to this article in reconciling your account: Learn the reconcile workflow in QuickBooks. It includes there how to edit completed reconciliation and fix a reconciliation.

Please get back to this thread if you need more assistance. I'll be around to help you. Have a fantastic day!

 

Highlighted
Level 1

How do I write off an unpaid invoice?

I have followed the steps through creating the credit memo.  Everything worked as described here and in the Quickbooks Online help instructions until I get to the Receive Payment step.  When I do Receive Payment, it allows me to select the customer and I see the outstanding transactions.  What is missing is the Credit section where I can apply the credit memo.  It is requiring me to select a payment method and enter an amount.

 

When I look at my open receivables report,  I see the reduction in the open receivables for the write-off.  Am I no longer required to apply the credit memo to one of the invoices?

Highlighted
QuickBooks Team

How do I write off an unpaid invoice?

Thanks for joining the thread, @Mark381.

 

I appreciate you for following the steps provided by my colleague above. There's a possibility that the Automation feature is turned on, that's why you're able to see a reduction to the receivables reports in QuickBooks Online. 

 

It would be my pleasure to help walk you through the steps on how to check the settings. Here's how:

 

  1. Go to the Gear icon on the upper right pane. 
  2. Select the Account and Settings tab.
  3. Choose Advance, then locate Automation
  4. Verify if the Automatically apply for credits is On

 

Once verified, nothing to worry about your reports because you're on the right track. If you don't want to automatically apply the credits to your existing transaction, simply turn off the feature. 

 

However, if the Automation is already turned off and still unable to apply to credit, I suggest performing a few basic troubleshooting steps to resolve the issue. To start, access your QBO account using a private browser. At times, the stored data can cause some problems in your browser's web pages.

 

Use these shortcut keys: 

  • Ctrl+ Shift + N (Google Chrome)
  • Ctrl + Shift + P (Mozilla Firefox)
  • Ctrl + Shift + P (Internet Explorer)
  • Command + Shift + N (Safari)

Once logged in, go to the Received Payments and check if you're able to apply the credit memo. If the private browser works, you can clear the cache depending on which browser you're using through this helpful article: Delete Temporary Internet Files. Using another compatible browser is a good option too.

 

Let me know if there's anything else you need about QuickBooks by clicking the Reply button below. I'm always here to help.

Highlighted
Level 1

How do I write off an unpaid invoice?

Thanks.  That is what it turned out to be.  I found it in another training video.  When this feature is turned on, it applies the credit to the next invoice.  Once I turned it off, I was able to apply it to a current invoice.

 

Thanks for the quick response.

Highlighted
Level 2

How do I write off an unpaid invoice?

Uh oh...that's how I have been doing it while in accruel is that ok? Nothing has ever ended up in bad debt...not because I didn't want it to but because I didn't know how. My only concern was that it might look as if the customer returned items to inventory and that obviously never happened so all these years when I didn't want to have inventory in qbks it's affected my cost of good sold probably making it appear I had more in inventory than is real...I hate accounting and bookkeeping as they make it impossible to understand the accruel and I bet I've lost so much money not understanding anything. Sorry but whoever thought up accruel

makes me upset.

Highlighted
QuickBooks Team

How do I write off an unpaid invoice?

Thanks for following on this thread, @LW2.


Based on the details provided, record the uncollectible customer transactions using the bad debt process. This ensures your accounts receivable and net income are up to date.


You can also use this method for accrual accounting. Since there were transactions recorded as credits, I recommend consulting with an accountant for further assistance.


They can provide recommendations on how to properly input them in QBO. This way, it will not throw off your records.


If you’re using the online version, follow the steps provided by @Jovychris_A above. For QuickBooks Desktop, let me show the process.

 

  1. Go to the Lists menu to choose Chart of Accounts.
    bd.png
  2. Scroll down to the bottom of the page and click the Account drop-down to select New.
    bd1.png
  3. This will open another window where you can continue setting up the account.
  4. Mark the radio button for Expense and then tap the Continue button.
    bd2.png
  5. Enter a term that will identify the entry in the Account Name field, for example, Bad Debt.
    bd3.png
  6. Press Save and Close to keep the changes.

You’re now ready to close the bad debt. To accomplish this task, follow the recommended steps in this article and proceed directly to Step 2: Write off bad debt in QuickBooks Desktop.


Let me know in the comment section below if you need further assistance. I’m always ready to help you. Have a good one.

Highlighted
Level 1

How do I write off an unpaid invoice?

I have tried this, the issue I find is these write offs will eventually end up in the sales tax liability report. So my question is, are the items supposed to be taxable or nontaxable items. We have been audited by the State of Texas before and anything listed under non tax has to have a valid reason. If non taxable or taxable, either way shows up on reports we submit to the state. What do you advise.

Thank you.

sw

Need to get in touch?

Contact us