Write Off Bad Debt

Writing off bad debt allows organizations to remove uncollectible accounts from their books, improving the accuracy of financial reporting and ensuring that the Accounts Receivable balance reflects only amounts expected to be collected.

Setting Up a Bad Debt Product

Before writing off an invoice, you need to create a product specifically for bad debt. This ensures that the write-off is properly tracked in your General Ledger and does not impact revenue.

To set up a Bad Debt product:

1. Create a new Product named Bad Debt.

2. Set the product as a Non-Revenue Product.

   
3. Click Create Product.

   
4. Locate the invoice that needs to be written off.

5. Click the three points (...) at the end of the invoice row.

6. Select Create Credit Memo from the dropdown list.

   
7. In the credit memo, change the product to Bad Debt.

8. Click Save to finalize the credit memo.

   

See Also

See related articles on managing uncollectible balances:

• Add a Credit Memo

• Apply an Open Credit to an Invoice

• Customer Overpayment

• Create a Journal Entry

• Closing the Books