Want to know, how to write off bad debt in QuickBooks Online and QuickBooks Desktop? This article will let you know the process of writing off QuickBooks bad debt in both versions. Read the complete article to get detailed information regarding this topic.

If you are new to manage to account, and also new to QuickBooks then, you should start with the meaning of bad debt. And if you already know, what is bad debt, and you just want to write off it in QuickBooks then start with the procedure by choosing your version type.

What is Bad Debt

Bad Debt is a debt in which a customer owes you a particular amount but you don’t receive any amount from him. It is considered to be uncollectible since the debt is not going to be paid off. After a financial month\year, the number of bad debts which are not paid or received is written off through deduction. 

Charged or written-off debt is a seriously overdue debt and the lender has given up on being paid. The bad debt that is written off adds to the balance sheet under doubtful accounts. 

When the invoices that you send to QuickBooks become uncollectible then it is automatically recorded as bad-debt. It consequently highlights your accounts receivable and net income stay up-to-date.

Lets know, how to write off QuickBooks bad debt in the both versions Online & Desktop.

How to Write Off Bad Debt in QuickBooks Online

Follow the simple 6 steps for writing off bad debt in QuickBooks Online:

Step 1: Ensure the Aging Accounts Receivable

The account ageing details make sure to review invoices and receivable that termed as bad debts. So first, ensure the aging accounts receivable by following the below steps:

  • Browse the ‘Report’ Menu 
  • Locate and open Account Receivable Ageing Detail Report.
  • Check the withstanding accounts receivable that are entitled to be written off.

Step 2: Generate a Bad Debt Expenses Account

Now you need to create an account of bad debt in the second step.

  • Locate the Setting and Select Chart of Accounts.
  • In the chart of accounts, you can find the ‘Account Type’, choose Expenses.
  • Select Bad debt from Detail Type.
  • Choose Save and Close.

Step 3: Generate a Bad Debt Item 

In this step, you need to create a bad debt item. Because, if you will not create a non-inventory item as a place holder for the bad debt then it will not be the real item. The availability of the item will be consider as to balance accounting. So if you haven’t create it then, create the bad debt item.

  • Locate Setting and choose Products and Services.
  • Select New from the upper right corner and then Select Non-inventory 
  • Enter Bad Debt in the name field. 
  • Select Bad debt from the drop down menu of Income account.
  • Choose Save and Close.

Step 4: Now Create a Credit Memo

  • Select +New
  • Choose Credit note
  • Select the Customer from drop down menu
  • Select Bad Debt from Product\Service selection list
  • Enter the account selected tp write off in the account column 
  • In the message displayed on the statement box, Enter Bad debt.
  • Choose Save and Close.

Step 5: Apply the Created Memo to the Invoice

  • Choose +New
  • Select Receive payment from the customers list 
  • Choose the appropriate customer from the customer drop down 
  • Select credit note from credit selection.
  • Choose Save and close.

Step 6: Run the Report of Bad Debt

  • Choose Setting 
  • Choose Charts of Accounts
  • Select RUN report in the action column of bad debt accounts.

To Void a Partially Paid Invoice

By adding a note to their name you can distinguish between other customer and bad debt entity.

  • In the ‘Sale’ menu Select the ‘Customer‘ option.
  • Choose the customer’s name 
  • Select Edit from the upper right corner.
  • Enter Bad debt or No credit along with the customer name in the display name field.
  • Choose Save.

How to Write Off Bad Debt on QuickBooks Desktop

Follow the procedure to write off a bad debt in QuickBooks Desktop:

Step 1: Add On the Expense Account

First of all, add the expense account, it will help you to track the bad debt.

  • Check the LIST menu to select the Chart in Account.
  • Check the account menu and then Select New
  • Choose Expenses and then select Continue
  • Enter the Account Name.
  • Select Save and Close

Step 2:  Close the Unpaid Invoices

Now in this step, you need to close the unpaid invoices

  • Check the Customer menu to Select Receivable Payments.
  • In the Received From field enter the name of the customer 
  • Enter the amount from the Payable Amount
  • Choose Discounts and Credits
  • Enter the amount to be written off in the field of Amount of Discount.
  • Select the account you added in Step-1 in the Discount Account and then select done. 
  • Choose Save and Close.

How to Write Off Bad Debt in QuickBooks Cash Basis

  • First of all, click on the ‘+New’ option, and select the ‘Credit Memo’ option.
  • After that, you need to fill out some of the necessary details.
  • Save all the details that you have filled out, and close it by clicking the Save and Close’ option.
  • Now, search the invoice, and click on the ‘Receive Payment’ option.
  • Checkmark on the invoice or the credit memo.
  • At last, click the Save and Close’ option.

Final Thought

The above article is all about writing off bad debt in QuickBooks Online, and Desktop. We have given the entire procedure of the writing of the bad debt in QuickBooks Online, and QuickBooks Desktop. This must be informative for you. If you have not written off the bad debt due to the lack of idea regarding the process then do it now. Feel free to share your problem, if you find any kind of issue during the process. We will help you to fix the problem as soon as possible through our QuickBooks experts.

Call Now

    Contact our Experts

    Get your accounting work done by experienced accountants. Fix all your accounting software errors & problems.