Before writing off bad debt, it's essential to review the outstanding invoices and identify the specific ones that are uncollectible. Make sure you have exhausted all collection efforts before proceeding.

To properly track bad debt, you need to create an expense account specifically for this purpose. First , select the gear (settings) in the top right hand side of the web page.

From the Account Type dropdown, select Expenses.

In the account name field name it something like, "Bad Debts," "Bad Debt Expense" or "Uncollectible Accounts."

Income
Expenses
Banks
Assets
Credit cards
Liabilities
Equity
Save account under *
Tax form section *
Account name *
Description
Profit & Loss
NEW ACCOUNT PREVIEW
Balance as of 09/27/2023
Cost of Goods Sold
Cost of Goods Sold
Expenses
Advertising and Promotion
Automobile Expense
Fuel
Bad Debt
Bad Debts
Bank Service Charges
Computer and Internet Expenses
Consulting
Continuing Education
Court
Data
Depreciation Expense
Dues and Subscriptions
HAA Heir Assistance Admin.
Insurance Expense
Investigations
Janitorial Expense
Legal Fees
Meals and Entertainment
Notary
Office Supplies
Other Miscellaneous Service Cost
Parking
Payroll Expense
Postage and Delivery
Professional Fees
Purchases
Rent Expense
Repairs and Maintenance
Research Services
Taxes
Telephone Expense
Travel Expense
Uncategorized Expense
Unknown
Utilities
Other Expenses
Interest Expense
Reconciliation Discrepancies
SBA Interest Expense

Now you will have to create a specific product for bad debts. Click the gear icon.

Name it "Bad Debts" or something similar.

Select the expense account you created in previous steps.

Now, you need to create a credit memo to remove the unpaid amount from the customer's account. Go to "Get paid & pay"

Select the customer with the bad debt you need to write off.

QuickBooks

Writing off bad debt in QuickBooks Online is a straightforward process that allows you to accurately reflect the financial health of your business. When a customer fails to pay their outstanding invoice, it becomes a bad debt. Writing off bad debt removes the unpaid amount from your accounts receivable and recognizes it as an expense. Here's a step-by-step guide on how to write off bad debt in QuickBooks Online.

How to Write Off Bad Debt in QuickBooks Online