Not everybody who you render your services would turn out to be a paying customer. Anything can go wrong anytime. No matter how unfortunate the event is, you have to write off their outstanding invoice. To do this, you need to have a bad debt expense account set up which is very easy. If you don’t already have it, follow the steps given below to create one or you can simply call the QuickBooks Technical support phone number (+1(866)511-4911) to get instructions from the experts.
Press the gear icon and from there select the chart of accounts.
Click on new.
You have to select ‘expenses’ as the account type.
In the name field, type ‘bad debt’.
Choose bad debts as the detail type.
The next thing for you is to create a credit memo to apply the outstanding invoice. The following are the steps you have to take to create one:
Click on the plus icon and select a credit memo underneath the customer column.
Now select the customer.
Always use the current date as the credit memo date. [Note: don’t use the previous year’s date as it will only affect the past filed tax returns].
Select the bad debt item. [In case you don’t already have a bad debt item set up, you have to click on add new and service for the type].
In the name field, type ‘bad debt’.
For the income account, select a bad debt expense account.
Now hit save and move to the close tab. You can also type bad debt if you want and also write a description of that.
In the amount of the credit memo, enter the amount of the outstanding invoice.
On the left menu bar, click on the sales menu bar and then click on the customers' menu at the top.
From the customers' menu, you can find the customer and you will also notice that QuickBooks has already applied the credit memo in the invoice for you.
With QuickBooks, everything is as easy as it can get and writing off bad debts too. It is the easiest and the most affordable accounting software which you can operate yourself and so many businesses use it to make their accounting easy and effective.