Writing off an invoice to bad debt in Quickbooks Online

[@oiboy626]

It’s unfortunate that we have to search for this type of video but thank you for the information.

[@chaslesplumbing0077]

Thanks for the video it was very helpful.

[@Carolina-ll5et]

Thanks for the video. I had a question on the part where we Receive a Payment. I noticed you left the amount to go into Undeposited Funds. Would that cause a balance to remain in undeposited funds from that point forward? Thanks!

[@maja2144]

I have a question My company is a SaaS company and we want to bad debt some of the customers who were supposed to pay since January , the problem is we can bad debt the revenue until this month because we have stopped the service for them , so what are we supposed to do with the rest of the invoice ?

[@josangloria2111]

New subscriber here thank you for this video. We'll explained keep in making more great videos on QB.

[@chwbookkeeping464]

Thanks! Will do!

[@dianaavila9844]

Thank you for your video :)

[@TanNguyen-iv5yh]

Too bad that this method does not allow us to keep track with the bad debt when we are uncertain if they should be written off or no. In my accounting class, we use a contra A/R account called Allowance for doubtfull account to keep track with the Bad debt to show the in FS readers our potential uncollectible AR on the BS

[@justinsweitzer7012]

Is there a way to record the bad debt that it wont show up as income received on the P&L?

[@chwbookkeeping464]

Unfortunately there isn't a way to record it like that. Until the invoice is paid or written off, the income sits on your balance sheet in your Accounts Receviable. Once you write down the invoice to bad debt, the income has to be recorded in order for the Bad Debt expense to offset. Hope that helps

[@theglasscompanylaurelms7902]

Thanks for the video but I do have one question when I take these steps, and I have tried and retried several times, it only credits the customers account and doesn't even give the option to attach the credit memo to the invoice. When we go into receive payment it says there is no outstanding invoices for that customer and the customer shows paid up. Not sure what I'm doing wrong, can you help?

[@chwbookkeeping464]

I would be more than happy to hop on a quick zoom call and see if we can figure this out. if you want to reach out to me on my website, i can follow up with you. www.chwbookkeeping.com

[@xdxyn7438]

You have the Auto apply credits turned on in your account setting under advanced. FYI if you didnt get the answer. I had the same issue

[@jbirston]

I have a question. I had a client pay his bill and then we refunded it because he was complaining about the staff member who helped him. So the steps I took were 1) Create Invoice 2) Pay invoice (Used undeposited Funds because it was part of a visa batch) 3) Refunded Invoice (Refund Receipt. Used Undeposited Funds as the refund was also part of a batch). Then I went in and deposited the batch to the bank that had the refund in it) Now I need to write that invoice off to bad debts. Is this when I start the process in your video? Thank you for your help!!

[@chwbookkeeping464]

Sorry for the late comment, just in case this hasn't been taken care of already. It sounds like the invoice is already paid in full with the original payment; therefore there is no invoice to write off to bad debt. When you did the "refund receipt" you already reduced your income back down when that was recorded. There shouldn't be a need to do anything else.

[@noahwilliams2078]

There is another easier and more accurate method of Writting-off a Bad Debts Step 1:Create a Journal Entry (Bad Debts-Debit) and (Accounts Receivable-Credit) with Customer reference. Step 2: Receive Payment of invoice and In Bottom apply the Bad Debts transaction to that invoice this way amount will be recorded in Bad Debts accounts and the exact invoice will be written-off.

[@chwbookkeeping464]

While I agree with the short route using journal entries, this video is for individuals that are not in the accounting industry. From my experience, journal entries should not be made by most individuals, only their accountant and occasionally the bookkeeper. They almost always get it wrong and always are confused on the which debit vs credit. This video is to teach them an easier method that does not involve advance accounting mechanics.

[@noahwilliams2078]

Then it's good that your method is relevant to people. By the way, do you think that this Journal Entry approach is correct for this purpose to be used by Bookkeepers?

[@chwbookkeeping464]

The journal entry method is much quicker as you do not need to create an "product/Service for Bad Debt" to be used in the credit memo as well as create the credit memo. As long as the entry is done right and the payment is received to fully close out the balance of the customer. I use journal entries myself; however I do come across erroneous journal entries all the time from other professionals that leave me scratching my head as to why they did it.

[@TanNguyen-iv5yh]

But doing it this way, you will overstate your income no? You never actually receive any payment... I am not sure how can you apply the bad debt transaction to an invoice? I dont see that option in my QBO. Could you please elaborate?