QuickBooks Invoicing · Bad Debt Write-Off

How to Write Off an Invoice in QuickBooks Desktop and Online

A customer will not pay and the invoice is uncollectible. The right move is to write it off as bad debt, not delete it, so your accounts receivable and net income stay accurate.

At QuickFix Bookkeeping, the method matters for tax. The credit memo route keeps your sales tax liability clean. Note that cash-basis taxpayers should confirm treatment with their accountant, since a bad debt expense entry can misstate income.

Write Off an Invoice, Step by Step

METHOD 1QuickBooks Online, Credit Memo MethodRecommended

Identify the bad debt. Go to Reports, open the Accounts Receivable Aging Detail report, and confirm which invoices are truly uncollectible.

Create a Bad Debts expense account. Go to Chart of accounts, New, set Account Type to Expense and Detail Type to Bad debts. This keeps the loss separate from operating expenses.

Create a Bad Debt item. Add a non-inventory service item named Bad Debt and point its income account to the expense account from step 2. Leave it non-taxable so sales tax is not affected.

Create a credit memo. New, Credit memo, select the customer, choose the Bad Debt item, enter the unpaid amount, and type Bad Debt in the statement message. Save and close.

Apply the credit to the invoice. New, Receive payment, select the customer, tick the open invoice under Outstanding Transactions and the credit memo under Credits. Save and close. The invoice clears to zero.

METHOD 2QuickBooks Desktop, Credit Memo MethodKeeps sales tax clean

Create the Bad Debt expense account. Lists, Chart of Accounts, Account, New, select Expense, name it Bad Debt, Save and Close.

Add a Bad Debt item as a Service type, mapped to that expense account, set non-taxable.

Create a Credit Memo for the customer using the Bad Debt item at the unpaid amount, then apply it to the open invoice so the balance zeroes out.

METHOD 3Write Off Invoices Tool (Accountant)Batch, QBO Accountant

In QuickBooks Online Accountant, go to Accountant Tools, then Write off invoices. Set the Invoice Age, To date, and Balance-less-than filters, select Find invoices, tick the ones to clear, choose your bad debts account, and select Apply. QuickBooks zeroes them and posts to the write-off account automatically.

Write Off vs Delete vs Void

Action	Effect	Use When
Write off	Records the loss to bad debt, clears the receivable, keeps history	A real sale that will never be paid
Void	Zeroes the amount, keeps the record, no expense booked	Invoice issued in error but worth keeping a trace
Delete	Removes entirely, no record, no loss recorded	Pure mistake, never sent