I appreciate the detailed information that you've provided me, brussell2333.
You may want to record a bad debt for the invoices that become uncollectible in QuickBooks Online (QBO). Doing so ensures your accounts receivable and net income stays up-to-date. Then, you'll be able to close the open invoice and zero out the customer balance.
To do this, you'll need first to create an expense account for bad debts:
- In the left menu, click Accounting.
- Go to the Chart of Accounts tab.
- Click New to create a new account.
- From the Account Type drop-down menu, select Expenses.
- From the Detail Type dropdown menu, choose Bad debts.
- In the Name field, enter “Bad debts.”
- Click Save and Close.
Then, create a non-inventory item that will hold the bad debt:
- In the left menu, click Sales.
- Go to the Products and Services tab.
- Click New.
- Choose Non-inventory.
- In the Name field, enter “Bad debts.”
- From the Income account drop-down, select Bad debts.
- Click Save and Close.
After that, create a credit memo and ensure to apply it to the invoice you want to close. For detailed steps, continue following Step 4 and 5 outlined in this article: Write off bad debt in QuickBooks Online. It will provide you with information on how to manage uncollectible invoices in QuickBooks.
As always, you can visit our Sales and customers page. It provides you links about managing your company's income and customers.
Feel free to post in the comment section should you have any other questions in mind. I'm always here to keep helping. Have a great day ahead.
