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Credit Memo Customer Center Customers Invoice

How to write off a customer unpaid invoice as bad debt expense?

When a Customer Invoice becomes non-collectible, you will generally write it off as bad debt expense. You will create a credit memo to clear Accounts Receivable (A/R) balance and that will hit the P&L during that accounting period.

You will need to take the following steps in QuickBooks:

Step 1: Create Bad Debts Expense Account (COA)
1 create bad debts expense account

Step2: Create Bad Debts as Product/Service Item
2 create bad debts item

Step3: Create Customer Credit Memo
3 credit memo

In addition, if you want to automatically apply credit memo against open A/R balance, you will need to change the company gear and take the following steps:

From the home page screen:

  • Company Gear (upper right corner)
  • Settings
  • Company Settings
  • Advanced
  • Automation
  • Automatically apply credits
  • ON
  • Done

6 automatically apply receipts
If this setting is off, you will need to select Receive Payment. That will be step #4. This will clear both invoice balance and credit memo and will show zero balance after that.

To create a new bad debts expense (step#1):
From the home page screen:

  • Company Gear (upper right corner)
  • Settings
  • Chart of Accounts
  • New (blue button upper right corner)
  • Category Type = Expenses
  • Detail Type = Bad Debts
  • Name = Bad Debts
  • Description = Bad Debts Expense
  • Save

To create a new bad debts as product/service item (step#2):
From the home page screen:

  • Company Gear (upper right corner)
  • Lists
  • Products and Services
  • New (blue button upper right corner)
  • Name = Bad Debts
  • Description = Bad Debts
  • Income Account = Bad Debts
  • Uncheck “Is Taxable” box
  • Save and Close

To create a customer credit memo (step#3):
From the home page screen:

  • Create + Sign (top middle)
  • Customers
  • Credit Memo
  • Choose a customer
  • Product/Service = Bad Debts
  • Amount = Open invoice (or balance) write off amount
  • Memo = Indicate for record why needed to create this credit memo
  • Attachments (paper clip icon) = Attach all documents
  • Save and Close

4 customer page

5 bad debts expense

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How to write off a customer unpaid invoice as bad debt in QBO

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Categories
Reports

How many reports are currently available in new QuickBooks Online? How to check reports?

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  • From the home page screen
  • Go to blue navigation bar on the left
  • Select Reports
  • Select “Go to report” (spyglass)
Search Reports
Search Reports

These are standard reports currently available in new QuickBooks Online Plus?

  1. A/P AGING DETAIL
  2. A/P AGING SUMMARY
  3. A/R AGING DETAIL
  4. A/R AGING SUMMARY
  5. ACCOUNT LISTING
  6. Audit Log
  7. BALANCE SHEET
  8. BALANCE SHEET SUMMARY
  9. BILL PAYMENT LIST
  10. CHECK DETAIL
  11. COLLECTIONS REPORT
  12. Company Snapshot
  13. CUSTOMER BALANCE DETAIL
  14. CUSTOMER BALANCE SUMMARY
  15. CUSTOMER CONTACT LIST
  16. DEPOSIT DETAIL
  17. ESTIMATES BY CUSTOMER
  18. Exceptions to Closing Date (Audit History)
  19. EXPENSES BY VENDOR SUMMARY
  20. GENERAL LEDGER
  21. INCOME BY CUSTOMER SUMMARY
  22. INVENTORY VALUATION DETAIL
  23. INVENTORY VALUATION SUMMARY
  24. INVOICE LIST (INVOICE LIST BY DATE)
  25. JOURNAL
  26. OPEN PURCHASE ORDER LIST (OPEN PURCHASE ORDER LIST BY VENDOR)
  27. PROFIT AND LOSS
  28. PROFIT AND LOSS DETAIL
  29. PURCHASES BY PRODUCT/SERVICE DETAIL
  30. PURCHASES BY VENDOR DETAIL
  31. RECENT TRANSACTIONS (TRANSACTION REPORT)
  32. RECENT/EDITED TIME ACTIVITIES
  33. Reconciliation Reports
  34. SALES TAX LIABILITY REPORT
  35. SALES BY CUSTOMER DETAIL
  36. SALES BY CUSTOMER SUMMARY
  37. SALES BY PRODUCT/SERVICE DETAIL
  38. SALES BY PRODUCT/SERVICE SUMMARY
  39. Scorecard
  40. STATEMENT LIST
  41. STATEMENT OF CASH FLOWS
  42. TAXABLE SALES DETAIL
  43. TAXABLE SALES SUMMARY
  44. TIME ACTIVITIES BY CUSTOMER DETAIL
  45. TIME ACTIVITIES BY EMPLOYEE DETAIL
  46. TRANSACTION DETAIL BY ACCOUNT
  47. TRANSACTION LIST BY CUSTOMER
  48. TRANSACTION LIST BY DATE
  49. TRANSACTION LIST BY VENDOR
  50. TRANSACTION LIST WITH SPLITS
  51. TRIAL BALANCE
  52. UNBILLED CHARGES
  53. UNBILLED TIME
  54. UNPAID BILLS
  55. VENDOR BALANCE DETAIL
  56. VENDOR BALANCE SUMMARY
  57. VENDOR CONTACT LIST

Date: 03/26/2014