Writing Off an Accounts Receivable Invoice to Bad Debt

If a customer’s accounts receivable is identified as uncollectible, it is written off by removing the amount from Accounts Receivable.  This method illustrates a direct write-off to the receivables account.

An Adjustment Code will first need to be created by going to Accounts Receivable –> Credit Memos & Adjustments -> Invoice Adjustment Code.  This is an example of an adjustment code for a typical invoice with a debit balance.

Adjustment Code – Enter a 3-character code, alpha and/or numeric

Description – Enter descriptive verbiage for this code

Debit Account – Enter the expense account for Bad Debt or press F6 to select from a list

Credit Account – Enter the accounts receivable account or press F6 to select from a list

IMPORTANT:  A separate adjustment code will be necessary to write off invoices with a credit balance.  An accounts receivable account will need to be entered into the Debit Account field and the expense account for Bad Debt will be entered into the Credit Account field.

To write the invoice off to bad debt, select the menu option Invoice Adjustment.

Invoice Number - Enter the Invoice Number being written off.  Press Enter.

Adjustment Code - Enter the Adjustment Code or press F6 to select from a list.

Adjustment Amount - Enter the amount to adjust.  If the invoice balance is a debit, or positive amount, enter as a negative amount.  If the invoice balance is a credit, or a negative amount, enter as a positive amount.

Example of an invoice adjustment for an invoice with a debit balance:

Example of an invoice adjustment for an invoice with a credit balance:

When using the Invoice Adjustment process, the Invoice Balance and the Adjustment amount added together is what the resulting balance will be for the invoice you are adjusting.

**If at any point you run into any issues, feel free to email [email protected] for assistance.**