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

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

Jump to:

• If Sales Tax Is Reported On Invoice
• If Sales Tax is Not Reported On Invoice

If Sales Tax Is Reported On Invoice

1. Create Credit Item for Invoiced Item
   
   1. Click Projects > Items > (select item) > Edit
   2. Click Create Credit Invoice; "CREDIT" will automatically be added in the beginning of the description
   3. The Purchase and Selling Amounts will become negative (credit) by default; manually change any Other Costs to negative
   4. Change the Component number to the next item in the sequence; if the Component of the original item was A, change the Component of the CREDIT item to B
   5. Click Save and repeat this process for all unpaid items on the invoice
   6. Confirm that the amounts of the credit items = the unpaid balance on the invoice
   7. Add Invoice number of the original items to the CREDIT items; Save and close to clear the balance on the unpaid invoice
      
2. Reapply Credit to Balance Item to clear from Accounts Receivable
   
   1. Put the credit from credit items back into Funds Available
      
      1. Head to Accounting > Money In, change the Payment Method to Apply Payment to Items from Funds Available, and set the Received From to the Client ID
      2. Scroll to the bottom half of the screen; do not enter a dollar amount in the Amount field of the red #2 section, but you can adjust the date and description as you see fit
      3. Filter for Invoice # and enter the total negative amount in the Amount to Apply field on the credit items you created; if you do not see the item, change the Filter from Item Balance to All
         
         
      4. Click Post Payment to move the credit amount into Funds Available for this client
         
         
   2. Apply Payment to Items from Funds Available to the item with the balance
      
      1. Make sure the Payment Method is still set to Apply Payment to Items from Funds Available
      2. Filter for Invoice # and enter a positive amount in the Amount to Apply field on the items with balance due; this amount should equal the total amount that was just moved to Funds Available
      3. Click Post Payment

If Sales Tax is Not Reported On Invoice

1. Post a receipt (use Receive & Apply method), just like you would if the client were actually paying you
2. Change the Cash Account to something like Bad Debit and apply payment to all unpaid invoice items
3. Click Post Payment to clear off the balance on that invoice