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How do I record bad debt or void an Invoice?

Bad debt is when you have done work and created an Invoice for a Client, but that Invoice will never be paid. We recommend checking with your accountant/CPA first to determine the best practice on how to handle this. Below is a suggestion on how to write off Invoices as bad debt (or void an Invoice).

In order to stop an Invoice from being outstanding, it needs to either be paid or be $0. For this, you’ll use a negative line item to bring the Invoice value down to zero, and to keep track of bad debt or void items using the Item Sales Report.

  1. Go to the Invoices tab
  2. Find the Invoice that will never be paid and click on the edit link next to it
  3. Create a negative line item called Bad Debt (feel free to use Void instead, or something that you will recognize)
  4. Assign the item a unit cost that is the negative equal to the total amount of the Invoice outstanding
  5. Bad debt line item on an outstanding invoice.
  6. Ensure the Qty of this negative line item is set to 1
  7. The total amount outstanding should now be set to $0.00 and you can Save the Invoice.

FAQs

How do I find out how much Bad Debt I’ve written off in a period of time?

You can use the Item Sales report to find out how many times you’ve used the Bad Debt Item on your Invoices. Follow these steps:

  1. Go to the Reports tab
  2. Click on the Invoice Reports sub-tab
  3. Select Item Sales
  4. On this Report, use the Items dropdown and only select Bad Debt (or whatever you originally named the Item as)
  5. Item sales report showing bad debt item
  6. Click Update to apply the filter and now all of the Bad Debt line items will be shown with their appropriate negative amounts, too.

You can also use the Export to button to export the file out as a CSV/Excel file as needed.