How to...
You can write off bad debt by using various processes, such as negative invoices.
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- Write Off Bad Debt Using a Negative Invoice
You can write off a bad debt by entering and posting a negative invoice for the amount of the write-off. Use this method if you over-bill a client and need to reduce the amount of revenue expected. - Write Off Bad Debt Using Cash Receipts and a Bad Debt Direct Expense Account
You can write off a bad debt using a cash receipt to charge the amount to a Bad Debt Direct Expense account. - Write Off Bad Debt Using Cash Receipts and an Indirect Expense Account
You can write off a bad debt by using a cash receipt to charge the amount to a Bad Debt indirect Expense account. With this method, the write-off is absorbed into overhead, instead of affecting only the project responsible for the write-off. - Write Off Bad Debt by Making an Allowance for a Bad Debt Account
You can account for bad debts by regularly making an allowance for bad debt. The benefit of this method is that you accrue for bad debt at the time of the sale.
Parent Topic: Writing Off Bad Debt on Outstanding Invoices