Invoice Will Not be Paid - Bad Debt
If you know that a customer is not going to pay you for an invoice, you should write this sale off, typically as bad debt.
To do this:
- Create a new account named Bad Debt and assign it an expense account classification (6-xxxx).
- From the Sales module use the Enter Sales window to create a Credit Memo.
- After selecting the customer on the credit memo, click the Layout button at the bottom and change it to a Service layout.
- For each of the customer's outstanding debts, enter a line item and assign it to the Bad Debts account you created in step 1. Note: If you use Categories, make sure you enter the same category on the credit as you did on the original sale.
- When you're finished, click Record. The transaction you've recorded is called a customer credit.
- In the Sales command center open the Sales Register, then select the Returns & Credits tab from the top.
- Highlight the customer credit you created in step 2.
- Click Apply to Sale, opening the Settle Returns & Credits window.
- Apply the credit memo to one or more of the customer's open sales, which appear in a scrolling window.
- Click Record.