Unpaid Invoices in QuickBooks

[Beth Cannon]

What do you do with unpaid invoices in QuickBooks when you know you will not be able to collect rent and the tenant has either broken the lease or abandoned the property? Should the invoice just be deleted?

[Account Closed]

You will write the Invoice off. 

Let’s say this it’s been a few months and we haven’t heard from Karen Brookstone or received any money. It’s time to Write Off what she owes us.

Go to the Customer Center.

Right Click on Karen’s Name

Choose Receive Payment

DO NOT ENTER A PAYMENT AMOUNT IN THE PAYMENT AMOUNT FIELD !!!!!!

Click on Discounts and Credits 

Let's say Karen owes us $1,000.00, but she already paid us $262.50 out of her Security Deposit so she still owes us, let's say, $737.50. She never pays us the money and so we must write this amount off.   Follow the instructions above.   

You see that she owes us $737.50 so type that in the Amount of Discount Field

Make sure you have Write Offs listed in your Chart of Accounts as an Expense Account and then choose it from the Discount Account Field. 

In the Discount Class Field (The Rental Address) Choose Karen's address from the drop-down list. 

Click on Save and Close. 

You want to go through the RECEIVE PAYMENT scenario and use the DISCOUNT & CREDIT FEATURE because you don't want this money to show up as Income and you need to ZERO OUT THAT INVOICE !!! Remember,  you never actually received the money so why pay taxes on money you haven't received? Therefore you need to show this money owed, as a  Discount or a Credit.  And...by making it a WRITE OFF (an EXPENSE ACCOUNT) in your Chart of Accounts, this shows up as an Expense to you on your Profit and Loss Report, which it is, and off-sets the Invoice, leaving her owing you nothing.  It has been written off. 

Nancy Neville