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Is there a way to "forgive" part of an already-charged, but not fully paid, invoice? How would I record that?

 
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QuickBooks Team

Is there a way to "forgive" part of an already-charged, but not fully paid, invoice? How would I record that?

Yes, there's a way to do it in QuickBooks Online, msollek.

 

We can write off bad debt to handle this transaction. This method is used when a creditor is unlikely to be paid or not willing to take action to collect the payment for various reasons. I'll be delighted to guide you in doing the whole process.

 

First, we'll have to create an expense account dedicated to bad debts:

  1. Select Accounting from the sidebar menu.
  2. Choose Chart of Accounts.
  3. Click New to create a new account.
  4. From the Account Type drop-down menu, select Expenses.
  5. Select Bad debts from the Detail Type drop-down menu.
  6. Enter Bad debts in the Name field.
  7. Hit Save and Close.

Second, we need to create an item dedicated to bad debts:

  1. Select Sales from the sidebar menu.
  2. Choose Products and Services.
  3. Click New, then select Non-inventory.
  4. Enter Bad debts in the Name field.
  5. S elect Bad debts, from the Income account drop-down.
  6. Hit Save and Close.

Then, let's create a credit memo for the bad debt:

  1. Click the + New icon.
  2. Select Credit memo.
  3. Choose the appropriate customer from the Customer drop-down menu.
  4. In the PRODUCT/SERVICE column, select Bad debts.
  5. Enter the amount you want to write off in the amount column.
  6. You can enter Bad Debt in the Message displayed on statement box.
  7. Hit Save and Close.

Once done, we can now apply the credit memo to the invoice to complete the process:

  1. Click the + New icon.
  2. Select Receive payment.
  3. Choose the appropriate customer from the Customer drop-down menu.
  4. From the Outstanding Transactions section, select the appropriate invoice.
  5. Select the credit memo that you've recently created from the Credits section.
  6. Hit Save and Close.

In case you need to track all the receivables you tagged as bad debts, you can follow the Step 6 of this article in pulling up the report: Write off bad debt in QuickBooks Online.

 

By doing this method, your accounts receivable and net income will stay up-to-date. As always, you can count on the Community Team if you need assistance in managing your invoices.

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