Occasionally you will have customers who do not pay their account balance. At the end of the year, you may wish to write these off as bad debt. To do this, you will need to post a credit to their account, then after the end of day final report is processed, you should apply the credit to their invoice to remove all postings to their account. Once this are removed, you can delete the account.
Step 1 - Create an invoice to credit the amount of the bad debt.
Go into Order Entry Screen and select your customer the same way you would for creating a standard invoice.
When you are at the Item Number box, enter something like "BAD DEBT" or anything you prefer as long as it is not a stock item. Since you want to issue a credit only and not affect your inventory, this will keep any changes from occurring with inventory. You should receive a warning that the item is not found in inventory.
After entering amounts, you will have a negative amount. Print this invoice.
Step 2 - Run your end of day final.
After you have created all of your credit memos and printed them, run an end of day report as a final. This will move the credit memos to the customers account.
Step 3 - Apply the credit memo to the outstanding invoices.
Go into the Post Payments screen. On the top menu, select Apply Credits
Enter the customer that has the bad debt. You will see all credit amounts listed first, then the debit invoices following. You will need to apply the credits to any open invoices with a positive amount until all invoices have been zeroed out. When finished, click on Finished
Answer Yes to make changes final. Repeat this on all customers you need to write off.
