Writing off a customer's credit when we don't work with the customer any longer

Hi, @mich5428. You can record the customer's credit as a bad debt and then write them off. I'll go over some details to help you achieve the task in QuickBooks Online (QBO).

To begin with, check your aging accounts receivable using the Accounts Receivable Aging Detail report. This is to check which outstanding accounts receivable should be written off. Then, create a "bad debts" expense account. Here's how:
 

1. From the Cog Wheel, select Chart of accounts.
2. At the upper right, select New to create a new account.
3. From the Account Type ▼ dropdown, choose Expenses.
4. From the Detail Type ▼ dropdown, choose Bad debts.
5. In the Name field, enter “Bad debts.”
6. Click Save and Close.

After that, we need to create a bad debt item:

1. From the Cog Wheel,  choose Products & services.
2. At the upper right, click New, and then Non-inventory.
3. In the Name field, enter “Bad debts.”
4. From the Income account ▼ dropdown, select Bad debts.
5. Hit Save and Close.

Once done, proceed to create a credit memo for the bad debt:

1. Go to the + New button, then Credit memo.
2. Select the customer from the Customer ▼ dropdown.
3. In the Product/Service section, select Bad debts.
4. In the Amount column, enter the amount you want to write off.
5. In the Message displayed on statement box, enter “Bad Debt.”
6. Click Save and Close.

After creating the credit memo, it's time to apply it to the invoice. You can follow the Step 5 process through this article: Write off bad debt in QuickBooks Online.

Moreover, if you want to view a snapshot of your business, QBO offers various reports that you can generate.

Let me know if you have further questions about writing off a customer's credit. The Community team is always around to assist. 

I'm here to guide you write off the customer's overpayment in QuickBooks Online (QBO), @mich5428.

To offset the amount because of the overpayment, you can either create a journal entry. Before doing so, I suggest asking for additional guidance from your accountant to ensure you'll record everything accurately. When ready, refer to these steps:

1. Navigate to the +New menu and select the Journal entry option.
2. On the first row, select Accounts Receivable in the Accounts column.
3. Enter the overpayment account in the Debit column and select the name of the customer under the Name column.
4. In the second row, select the offset account (usually an expense account) and enter the amount under the Credit column.
5. Once done, select Save and Close.
6. Next, click the +New menu and choose Receive payment.
7. Select the name of the customer on the Customer drop-down.
8. In the Outstanding Transactions section, check the box beside the journal entry.
9. Then, in the Credits section, check the box for the overpayment.
10. When ready, click Save and close.

For reference, feel free to read this article: Write off customer and vendor balances. Please know that this is for QuickBooks Desktop (QBDT), but the steps are still applicable to QBO.

If you have other concerns managing your customer's transactions, please leave a comment below. I'd be glad to provide additional help to ensure you achieve your goal. Have a good one.