Table of Contents
When a customer does not pay the debt that is owed to your company, then the original invoice goes unpaid. QuickBooks bad debt makes it complex to reconcile your accounts and run accurate reports. You should create an account for the purpose of tracking such transactions, before recording a bad debt. By doing these, you could use the Credits and Discounts option within QuickBooks to record the debt while keeping the debt organized in a separate register for tax purposes. Recording bad debts into your regular customer register can make it more complicated to find the path of debt.
How to write off bad debt in QuickBooks Online?
Step 1: Review the aging report for your Accounts Receivable
The first step you will have to do when you write off bad debt in QuickBooks online. Make sure you review your Accounts Receivable Aging Detail Report very carefully. Here’s how you find it:
- From the left side menu, open the Reports section.
- Open the Search bar.
- Type Accounts Receivable Aging.
- Select the Accounts Receivable Aging Detail Report. This report will show your outstanding accounts receivable.
You May Also Read: QuickBooks File Doctor Download
Step 2: Make a new account for QuickBooks write off bad debt
The next step is to create an expense account.
Start off the process with this:
- Go to the Gear icon from the above Toolbar.
- Open Your Company.
- Click on Chart of Accounts.
- Click New.
- Use the Accounts notification and click on Account Type.
- You should see a drop-down menu open, click Expenses.
- From the drop-down menu for Detail type, select Bad Debts.
- In the name field, enter Bad Debts.
- Save and Close.
Step 3: Create a product item or a service item
- Go to the Gear icon from the above Toolbar.
- Select Lists.
- Click on the Products and Services list.
- Select New.
- You should see an information panel open, select the Non-Inventory option.
- In the name field, enter Bad Debts.
- Navigate back to the field for Income Accounts, and then select created account you newly created.
- Make sure you clear the ‘Is taxable’ checkbox.
- Save and Close.
Step 4: Draft a credit card memo
- Go to the Plus icon from the above Toolbar.
- From the drop-down list which opens, select Customer.
- Go to the newly created bad debts account which is present in the Products/Services field.
- Enter the amount.
- Type in Bad Debt in the Memo field.
- Save and Close.
Step 5: Apply the credit memo
- Go to the Gear icon from the above Toolbar.
- Navigate to the Customers tab, and then click on the Receive Payment.
- From the list which opens, select the customer.
- Navigate to the Outstanding Transactions section.
- Then, select all the invoices you would like to write off.
- Go to the Credits section, select the memo you newly created.
- The amount you have received has to be 0.00.
- Save and Close.
Step 6: Run a report for the write off bad debt in QuickBooks
- Go to the Gear icon from the above Toolbar.
- Open Your Company.
- Click on Chart of Accounts.
- Find the account you previously created for bad debts expenses.
- Select Action.
- From the drop-down menu that opens, click on Run Report.
Hope that helped!
If you choose to do this later or forget to do, you will need to offset the credit against the open invoice through the receive payments function for that customer. If you have any doubt or you need assistance please contact QuickBooks Enterprise Customer Support Number +1-805-257-5030.
See Also:
