DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Unpaid invoice - bad debt


#1

I have an unpaid invoice for £70.00 which is now 500+ days old and I want to write it off, how do I do this please.


#2

Go to Journal entries tab.

Credit Accounts receivable then select invoice.
Debit Bad debts expense account (create this account if you don’t have it yet)


#3

Many thanks


#4

Hello Lubos
i have similar issue we have lost 16K in bank transcation how to record the lost and deal with it
thanks for your help


#5

You need to furnish more information. How do you lose money in a bank transaction?


#6

Hello Tut
in short fund remit to wrong IBAN in UK NATWEST bank and can’t be recover as per their banking process they go according to IBAN # not a the recipient name… your advice


#7

Use a journal entry to debit “Bad Debts” and credit the Customer account

See here Write off bad debts


#8

This is a contingent cost not a bad debit. You should register the wrong payment against a “contingent cost” account in profit and loss. Than you will have to register the correct payment against the invoice.

BTW try to recover your money with a lawyer. What you have described is misappropriation and is punishable by law.


#9

Thanks David
this sound little easir


#10

Given that it is 500+ days and only £ 70, I assume that it isn’t worth spending a lot of time and/or money on recovery


#11

Davaid
what i understand form your advice is the following

open an account contingent cost under Purchase****expense

the next step pay the actual INVOICE is that what you mean, please advice


#12

Greetings From Kenya and Merry Christmas!

@lubos, I have some unpaid invoice(s) from same customer, and I dont think he’ll pay. When I mark them as Bad debts I’ve noticed that the same invoices disappear form my invoice list and the amounts appear in my ’bad debts’ expense account.

My accounting year ends in 6 days and I don’t want them to mess my P&L, or worse I don’t want to always see those invoices at the top of the list as pending invoices. Unfortunately for the business the expenses incurred to realize the profits on these invoices have already been entered in various expense accounts for this financial year.

Anyway, my concern is what If the same customer pays next year? I could delete that journal entry once he pays but remember I can never edit any entries from last accounting period once I ’Close the year’

Or do I just don’t mark them as bad debts until I am 100% sure that he will never pay?

Any thoughts?


#13

Your concerns are needless, @Kelvin. When you write off a bad debt, following the directions in the Guide, the invoice will show as Paid in Full. (It does not disappear from the list.)

The expenses are real, so they should remain, regardless of whether you ever collect on the invoice. Likewise, the income from the dishonored invoice stays in your income account, but will now be offset by an additional expense in Bad debts (or wherever you post the write-off).

The Guide also addresses what to do if a customer surprises you by paying a debt you have already written off. You would not edit this year’s accounts. You would make a reversing journal entry when the event occurs, as described in the last section of the Guide.

Whatever you decide—to write off the debt now or carry it further in hopes of eventual payment—make sure you are following legal requirements for your jurisdiction. The Guide addresses this warning, too.


#14

I read 16k to be honest… it’s worth spending some money with a lawyer.


#15

@Davide Huh?


#16

@clanger wrote “I have an unpaid invoice for £70.00”
@ishtiaq.omer wrote “we have lost 16K”
@Kelvin wrote “I have some unpaid invoice(s)”

Three different conversation which have crossed over within the topic.