How to Write Off Invoices as Bad Debt

When a customer goes bankrupt or a balance is deemed uncollectible, you can write off the invoice by posting the amount to your Bad Debt Expense account. This clears the outstanding balance in Accounts Receivable and properly records the expense on your income statement. The process is nearly identical to receiving a payment, except the funds are routed to the bad debt account instead of a bank account.

• Ensure a Bad Debt Expense GL Account Exists and create one in Accounting > Chart of Accounts if not
• Navigate to AR > Customer Invoices And Locate the Invoice(s) to Write Off
• Click “Receive Payment” For the Invoice
• Set Payment Method to Bad Debt By Choosing the Bad Debt Expense Account Instead of a Bank
• Enter Payment Date and Confirm To Post the Entry and Clear the AR Balance
• View the Journal Entry To Confirm the Amount Debited to Bad Debt and Credited from AR
• If Customer Later Pays You Can Reverse the Write-Off or Create a New Invoice and Apply Payment