You should see the Existing Credits for the amount of the credit memo you just created.Now choose Customers > Receive Payments and choose the customer who has the bad debt.(Customers > Create Credit Memos/Refunds) In the Item list, select the To Record Bad Debt item and enter the amount of the statement charge you want to record as a bad debt. Create a credit memo for the customer or job.Create an Other Charge item called “To Record Bad Debt.” Use the Bad Debt account for this item.In the window that drops down, enter the amount of the bad debt in the Discount field and the name of your bad debt expense account in the Discount Account field.Click the Payment column for the invoice that hasn’t been paid.The memo appears in the customer’s register and prints on statements. If you like, enter a memo at the bottom of the window that you’re writing off a bad debt.Select the name of the customer who hasn’t paid you.Now, choose Customers > Receive Payments.(Lists > Chart of Accounts.) Be sure to select Expense as the account type. If necessary, create an account for Bad Debt in your Chart of Accounts.When you’re ready, you can write off the debt in QuickBooks so you don’t keep seeing that open invoice or statement. Check with an attorney if things get to this point. Further efforts of collection may violate federal law. At this point the law provides a procedure for filing a claim for payment. The rules change if customer files for bankruptcy. If your customer owes you a lot of money, you should call the customer until you’re convinced the customer can’t or won’t pay. Generally, you should write off bad debt only after exhaustive efforts to collect. (This is called the accrual method of accounting.) Before you write off the bad debt This is only applicable if you’re using invoices or statements to ask for payment from your customers when you’ve already done work or sent them goods. Well, I can’t get your customers to pay you, but I can tell you what to do when they don’t.įirst of all, writing off bad debt doesn’t apply if you are using a cash method to track your business in QuickBooks. Then you’ve got that invoice or statement just hanging around in QuickBooks. Is there anything worse than a customer who doesn’t pay you? OK, maybe a bounced check, but not getting paid at all is just so bad.
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