Easy hacks for Writing off bad debt in QuickBooks

QuickBooks is a leading accounting software which includes a greater range of features which help all small and midsize business organizations manage their accounts accurately. Despite it being the best, there are still a few misses, which may highlight its algorithms and technicalities. Few amongst them can easily be tackled while some are a bit complicated such as writing off bad debt in QuickBooks.

With the aid of this blog, we are going to acquire all necessary details about writing off bad debts in QuickBooks along with all the advantages of using the tool. Thus, the user is suggested to follow the article till the end for best results

What does it mean “writing off a bad debt in QuickBooks”?

Bad debt is any amount which cannot be recovered. Or, to break it down a bit more, it is any amount lended by a customer which was not recovered. Hence, if any customer did not pay the bill, which were to be paid and for that, QuickBooks has this feature of writing off those amounts as bad debts so that the customer appears black listed and thus, will not be entertained by any company in future.

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What are the advantages of writing off a bad debt in QuickBooks?

It is important for any user to write off a bad debt in QuickBooks, if not, then it might be a bit difficult for any user to be able to reconcile accounts and create reports. Here are some more advantages of the tool:

1. Users will easily be able to clear the invoices from the accounts receivable and get a net profit amount.

2. The invoices become collectible when the bad debts are recorded.

3. There will not be any chance of miscalculations in not just the income statement but also in the profit and loss statement.

Follow these tips for a better management of the tool:

Pro tip 1: make sure that you do not have bad debts in the regular customer registry. This might make it tough to track the debt.

Pro tip 2: make sure that you create a bad debt account before recording any transaction. This way, you will have an organized report ready for all tax purposes.

What are the ways of writing off a bad debt?

Before recording a bad debt, the user first requires to create a bad debt account

First step: create a bad debt account:

1. Click on “company”

2. click on the “chart of accounts”

3. hit on “account”

4. press “new”

5. Select “expenses” as the account type

6. hit “continue”

7. Click on “number” and enter the account number

8. Click on “account name” and fill the space as “bad debts”

9. hit “OK”

Second step: record the bad debts:

1. Click on “customers”

2. hit “receive payments” from the drop-down list

3. select the customers with bad debts from the list of customers

4. Click “discounts and credits”

5. hit “amount of discounts” and enter the total amount of bad debts

6. Click on “done”

7. Click on “save and close” which will end the process.

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By following these two steps, you will manually be able to get through the process of writing bad debts in QuickBooks. However, we recommend you to talk to the customers first who refuse to pay the amount by being a little proactive via contacting them as soon as the invoice is delayed.

We have made the best of our attempt to offer you all the information. But, to get more information, get in touch with us by ringing us at (1-855-856-0042) .

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