Collaborate on Unpaid Invoice Letter for Accounting with Ease Using airSlate SignNow

Unpaid invoice letter for Accounting

hi everyone this is Cassie in today's tutorial we're going to learn how to handle unpaid invoices record them as a bad debt write-off and how to create and apply a credit memo as part of this process as well as credit memos in general before we begin please subscribe to our Channel and hit the like button for this video doing both will help us with the algorithms on YouTube which increases our visibility and ensures our ability to keep doing these tutorials so let's get started [Music] in addition to owning my digit docs123 my business partner and I own a bookkeeping business and we have a client with an outstanding invoice we know this client has no intention of paying and in bookkeeping terms this is referred to as bad debt there are a few ways to handle this on QuickBooks but today we're going to review how to handle this as bad debt by the way if you need a bookkeeper give us a call we offer free consultations also in today's tutorial we're going to talk about credit memos credit memos play a part in the bad debt process but these instructions apply for any credit memo you may need in QuickBooks credit memos are used to reduce open balances for whatever reason but today we're going to review the role of a credit memo in bad debt first thing we need to do is add a new category for bad debt start by going to your chart of accounts from the list section select products and services and then select new for this demonstration I'm going to select services but you want to select the option that applies to you in the name field add bad debt the description field is optional however but I want to explain that I am creating this category to write off bad debt under the income account we need to add a new account and then click on the drop down arrow scroll to the top and select add new under account type keep this field as income and make sure the detail type says discounts refunds given in the name field add bad debt be sure to save and close you'll be returned back to the product service information screen where you save and close again now we want to create a credit memo and use the bad debt category that we just added start by selecting new and then select credit memo in the credit memo select your customer and enter the date in the product service field choose bad debt be careful with that save button it may default to save and send and in my situation I want no further contact with this customer so I click the drop down arrow and chose save and close now it's time to apply that credit to the outstanding invoice start by clicking new and then select receive payment select your customer and then under outstanding transactions place a check next to the appropriate invoice scroll down a little bit to the credits section and place a check next to the credit memo that you just created you know you did this right when amount received says zero after all you're not receiving any new money you're simply applying a credit and then of course remember to click save and here's why we like handling unpaid invoices as bad debt I've pulled up our profit and loss where we see the bad debt as listed as a negative number which means it's deducted from your income it's good to know how much bad debt you've incurred throughout the year so your tax professional can handle it ingly please discuss bad debt with your tax professional to determine your write-off at tax season many small business owners like yourself use Excel in Google Sheets check out our selection of templates at .mydisitdocs123.com this is our Shopify store where you can purchase and download easy to use templates like time tracker mileage tracker password Made Easy and we even have a template for bookkeeping plus several for personal needs in fact our templates start at 1.99 and as one of our YouTube viewers we offer a 20 discount on any purchase over five dollars at checkout put in the discount code of YouTube one two three and please remember to like this video And subscribe to our Channel your support means a lot to us thank you and see you on the next tutorial