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Level 1

Client doesn't want to pay


- we delivered a job late and the client doesn't want to pay.

However, I have had to pay someone to produce the work at my expense,

How would I record this cost (including the VAT) as a loss of revenue on QB?

Many thanks, David

5 Comments 5
QuickBooks Team

Client doesn't want to pay

We're glad to see you here in the Community forum, D_RushPrint. I'm here to help you record the job your client doesn't want to pay in QuickBooks Online (QBO).


When we deliver a service to our customers, and they don't want to pay, we can record it as a bad debt in QBO. Then, generate a credit note for the bad debt and link it to the invoice under the customer. 


If you don't have an existing invoice for the unpaid job designated to the said customer, I recommend creating one before proceeding. It ensures that we can record the data accurately in QBO.


Yet, let's proceed with creating a bad debt expense account if there's already an existing invoice. This account will be used to designate the transaction.


Here's how:


  1. Go to the Gear icon and choose Chart of accounts.
  2. Click New
  3. On the Account type dropdown, select Expenses
  4. From the Detail Type dropdown, choose Bad debts.
  5. The system will automatically name this account as Bad debts.
  6. Once done, hit Save and Close.


After that, we can now create a bad debt item.


  1. Go to the Gear icon and click Product & services.
  2. Select New and choose Non-stock from the Product/Service information page.
  3. Enter Bad debts as the item's name in the Name field.
  4. On the Income account dropdown, select the Bad debts expense account.
  5. Once done, hit Save and Close.


Then, let's create a credit note for the bad debt.


  1. Go to the + New menu and click Credit note.
  2. Choose your customer from the Customer dropdown.
  3. On the Product/Service column, select Bad debts.
  4. From the Amount dropdown, enter the total amount of the expense plus the VAT amount.
  5. Type Bad Debt on the Message displayed in credit note section.
  6. Hit Save and close.


Finally, apply the credit note to the invoice to write off the amount.


  1. Go back to the + New and choose Receive payment.
  2. Select the customer from the Customer dropdown.
  3. Tick the invoice linked to the job that your customer doesn't want to pay.
  4. From the Credits section, choose the credit note that you've created.
  5. Once done, Save and close.


You can also run a report specific to your bad debts data. For more information, refer to this article: Bad debts report.


In addition, you may check this article if you need to void or delete invoices, expenses, and other transactions in QuickBooks: Void or delete transactions in QuickBooks Online.


Don't hesitate to reply to this thread if you have additional QuickBooks-related queries. We'll be in touch.

Level 1

Client doesn't want to pay

Good Morning Ivan,


Many thanks for your help and reply

- I will now have a go at working through all of the above 


Best Regards, D

Level 1

Client doesn't want to pay

Hello again Ivan,

Okay - so far I have followed everything, all good.

I now only have to link the credit note to the invoice

- Point 4 in your last section:  "From the Credits section, choose the credit note that you've created."

However, I can't see / don't have this facility on my Receive Payment window

- I'm using the very basic Wed-version of QB - could this be an extra paid for feature?

Best Regards, D

QuickBooks Team

Client doesn't want to pay

Hi there, @D_RushPrint.


I'm glad to know that my colleague was able to provide the appropriate workaround for recording the job payment for your client in QuickBooks Online (QBO).


Please let me know if there's anything else you need help with managing invoices. Have a great day!

Level 1

Client doesn't want to pay

Thanks again - all resolved,

Credit was being automatically applied to the customers oldest invoice.

I've managed to turn this feature off now and linked the refused invoice to the bad debt credit note.


Many Thanks, D