QuickBooks is an amazing software which is encompassed with an array of features which in turn helps the business organizations and all QuickBooks users to manage their accounts efficiently and accurately. Despite these many hits, there are also few misses, which may be related to its algorithm and technicalities, some of them can easily be alleviated while some amongst them is quite comprehensive. Not only error, but there are times when it gets quite jittery for users to write off bad debt in QuickBooks.
With the help of this article, we are going to procure all the insights about writing off bad bets in QuickBooks along with the various advantages of doing so. Hence, the user is recommended to follow the article till the end
What is the meaning of writing off a bad debt in QuickBooks?
Bad debt is any amount which cannot be recovered or in simple terms, it is an amount landed by a customer which is not recovered. Thus, if a customer isn’t paying the bill, which was supposed to be paid then QuickBooks has this feature of writing off the amount as bad debt so that the customer appears to be black listed and hence, will not be entertained by any company in future for lending money.
What are the advantages of writing off a bad debt in QuickBooks?
It is essential for QuickBooks to write off a bad debt in QuickBooks, else it might make it difficult to reconcile the users accounts and create accurate reports. Here are some more advantages of it:
- Users will be at an ease of clearing the invoices from the accounts receivable and get the net profit amount.
- There shall be no miscalculations in the income statement and profit and loss statement.
- The invoices become collectible when the bad debts are recorded.
Recommended to read: How to Resolve Quickbooks Won't Open
Here are some pro tips which will help user to work more efficiently:
Pro tip 1: ensure not to record the bad debts in the regular customer registry which in turn might make it more difficult to track the debt.
Pro tip 2: ensure to create a bad debt account before recording any such transaction. By doing this, the user will have an organized report ready for all tax purposes.
What are the steps for writing off a bad debt?
Before recording a bad debt, the user first requires to create a bad debt account
First step: creation of bad debt account:
- Click on “company”
- Select the “chart of accounts”
- Click on “account”
- Select “new”
- Select “expenses” as the account type
- Click on “continue”
- Click on “number” and enter the account number
- Click on “account name” and enter “bad debts”
- Click on “OK”
Second step: record the bad debts:
- Click on “customers”
- Select “receive payments” from the drop-down list
- Choose the customers with the bad debt from the list of customers
- Click on “discounts and credits”
- Select the “amount of discounts” and enter the total of bad debts
- Click on “done”
- Click on “save and close” which will end the process of recording the debts
With the help of these two steps, users will easily be able to get through the process of Writing off bad debt in QuickBooks. However, we recommend you to talk to the customers first who refuse to pay the amount by being a little proactive and contracting as soon as the invoice is delayed. We have put best of our efforts to offer you all the information. To get more information, get in touch with us by placing a call at 1-855-856-0042.
Also read this blog: Quick fix solutions when QuickBooks unable to send invoices