Writing Off Bad Customer Debt - Quickbooks Desktop

Writing Off Bad Customer Debt - Quickbooks Desktop

Sometimes it is necessary to "write off", or forgive a customer's open balance in Accounts Receivable. Follow these steps to clear your Accounts Receivable balance for any customer who will not pay and you decide to "forgive" the debt.

Setup
  1. Setup an Expense Account named "Bad Customer Debt", account number 698 (optional).
  2. Setup a Service Item named "Bad Debt", pointing to this expense account.
Writing Off Bad Debt
  1. Create a Credit Memo transaction (Customers Menu > Create Credit Memos/Refunds).
  2. Select today's date (Important! Do NOT date this transaction in the past!)
  3. Select the "Bad Debt" item.
  4. Enter the amount to write off.
  5. Click Save and Close.
  6. Select "Apply to Open Invoices".
  7. Follow the prompts to apply the credit to the invoices that you want to write off.

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