As a business owner, there are major chances of you landing up in a situation where your customers don’t make payment. They refuse to make any sort of payments or pay you the money they owe to you. After a lot of hard work, convincing, and different methods of collecting payment, you are unable to retrieve the money. If all your efforts of retrieving money have gone in vain, you have the only option left which is writing off an invoice as bad debts in your QB. This will ensure that your account receivable along with the income stays updated. There are ample ways where you can handle the task and here are some ways listed below.
Bad debts: Customer won’t be able to pay due to N number of reasons, and you have to make sure that this circumstance is under control. customer chooses not to pay for various reasons if the reasons are quite genuine, and you cannot do anything about it, you have to take appropriate steps. It is important to recognize it as a default and write it off in your invoice.
Underpayments: Maybe, your customer has made a payment to your invoice, and you are sure there is still a certain amount of balance. A clerical error is one of the reasons for it and in such cases, the money can be too small. Giving proper reminders to your customer, still there is no chance of getting the money back. In cases like this, you have to think rationally and make a decision to write off an invoice.
Why is there a need to write off Invoices?
There are not just one but several reasons that might be causing you to write off an invoice in your
QuickBooks Here are a few of the examples given below that are the causes to write off an invoice in your QuickBooks.
- It is not uncommon of seeing your customers delaying payment, avoiding payment, or refusing to make any payments and this is a sort of debt on the business owner. Unfortunately, it is something that you have to deal with without fail. The reason for having a bad debt is generally due to the financial condition of the customers.
- There are scenarios where your client, customers are unable to pay due to their financial troubles. Whatever is the reason, it is important to not overlook the matter but maintain the record for the same.
- There are other reasons too which is due to the errors that may occur from the customer’s side. The customer might have made some payment on the invoice but the balances are pretty much due on it.
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Easiest Ways to write off Invoice
- Firstly, launch your QuickBooks and then navigate to report Menu
- Choose on the customers and receivables from the list that appears and then select the ‘open invoice’ report
- Search for customers you wish to write off for the list that appears on the screen
- Information of the customer will appear on your screen like their name, the amount they owe, your invoice number
- Once you have customer information in brief, you can go ahead to the customer center or the menu and then select create credit memory, refunds.
- First, input your customer’s name, the date of the invoice you wish to write off
- Now, select the bad debt item, if you don’t have the item on the list, you can create one.
- To create your bad debts item, you can go ahead and add new, click on the other charge plus give it a name.
- Fill in the necessary information and then select the bad debts account, click on Ok to proceed.
- You can move ahead by proceeding to fill in other information like description, amount, sales tax, etc.
- Click on the save option, close it, and then you are on your final step of the QuickBooks write-off Invoice.
- The new screen will be displayed where you will be provided with the information of remaining balances, the option to offer you a refund, and to apply a credit to your invoice. Choose the apply credit option to your invoice and check off the bad invoice number to be sure, once done, click on Done.
Do not forget to cross-check your amount, customer details before closing. A slight error can affect your business accounting.
Do not forget to overlook this step because it is very important. The money that you are not getting back from your customer requires proper action. You may think to delay it and wait, however, the easiest action is to write off an invoice in your QuickBooks to simply delete the invoice. The decision that you take now will help you have a proper track of balance sheets, invoices, etc.