How Do I Clear Old Invoices That We Want To Write-off?

This article will help walk you through writing off older invoices to clear them from Accounts Receivable.

NOTE: It is advised to follow these steps especially if the item has sales tax that needs to be credited for sales tax reporting. 


Step 1: 
Create Credit Item for Invoiced Item
  • Select Items
  • Select Edit to view the Item you want to create a credit for
  • Select the Create Credit Invoice link
  • “Credit” will automatically be added in the beginning of the description
  • This will cause Purchase and Selling Amounts to be a negative (credit)
  • Manually change any "Other Costs" to negative
  • If you need to add restocking fees, add to "Other Costs" as a positive amount (this will reduce the credit amount)
  • Change the component number to the next item in sequence

  • Select Save
  • Confirm that the amounts of the credit items = the original items (less any restocking fees or changes in freight, etc.
  • Add Invoice number of the original item. Save and close.
Step 2: Reapply Credit to Balance Item to clear from AR
A. Put the credit from credit item back into Funds Available.
  • In the Money In screen, change the Payment Method to Apply Payment to Items from Funds Available. 
  • Scroll to the bottom half of the screen.  (Do not enter a dollar amount in the Amount field of the red #2 area, but you can adjust the date and description as you like.)
  • Filter for Invoice # and enter the negative amount in the Amount to Apply field on the item you want to remove the credit from. 
  • If you do not see the item, change the "Filter" from Item Balance to All
  • Click Post Payment.  

B. Apply Payment to Items from Funds Available to the item with the balance
  • Filter for Invoice # and enter a positive amount in the Amount to Apply field on the balance item you want to apply the money to.
  • Click Post Payment

 

If no sales tax was involved- they can follow these easy steps

  • Post a receipt (use Receive & Apply method), just like you would if the client was actually paying you.
  • Change the Cash Account to something like “Bad Debt”.

These accounts do not exist in Studio Designer by default. You may need to create.