How to Write Off an Invoice in QuickBooks (Online & Desktop)

Learn how to write off an invoice in QuickBooks Online and Desktop. Clear uncollectible invoices the right way using credit memos or the discount method and keep your accounts receivable accurate.

Writing off an invoice in QuickBooks is the proper way to clear an uncollectible customer balance from your accounts receivable while recording the loss as a bad debt expense. Simply deleting the invoice is not recommended because it removes sales history and can distort your reports.

This guide covers the correct methods for both QuickBooks Online and QuickBooks Desktop. For a more detailed walkthrough of the full process, see our complete guide on how to write off bad debt in QuickBooks.

When Should You Write Off an Invoice?

Only write off an invoice when:

1. The customer will not pay and collection efforts have failed
2. The customer is unreachable, bankrupt, or out of business
3. You have no realistic expectation of receiving payment
4. Your accountant agrees the amount is uncollectible

Start by reviewing your Accounts Receivable Aging Detail report to identify true bad debts.

How to Write Off an Invoice in QuickBooks Online

Step 1: Create a Bad Debt Expense Account

1. Go to Settings (gear icon) → Chart of accounts.
2. Click New.
3. Account Type = Expenses.
4. Detail Type = Bad debts.
5. Name the account Bad Debt Expense.
6. Click Save and Close.

Step 2: Create a Bad Debt Item

1. Go to Settings → Products and services.
2. Click New → Non-inventory (or Service).
3. Name it Bad Debt.
4. In the Income account field, select Bad Debt Expense.
5. Save and close.

Step 3: Create a Credit Memo

1. Click + New → Credit memo.
2. Select the customer.
3. Choose the Bad Debt item and enter the unpaid amount.
4. Save and close.

Step 4: Apply the Credit Memo to the Invoice

1. Click + New → Receive payment.
2. Select the same customer.
3. Check the unpaid invoice and the credit memo.
4. Confirm the total is $0.00 and save.

The invoice is now cleared and the amount appears as Bad Debt Expense on your Profit & Loss report.

How to Write Off an Invoice in QuickBooks Desktop

Step 1: Create a Bad Debt Expense Account

1. Go to Lists → Chart of Accounts.
2. Click Account → New.
3. Select Expense and continue.
4. Name it Bad Debt or Bad Debt Expense.
5. Save and close.

Step 2: Write Off Using Receive Payments (Recommended Method)

1. Go to Customers → Receive Payments.
2. Select the customer in Received From.
3. Enter 0.00 in the Payment Amount field.
4. Click Discounts and Credits.
5. Enter the write-off amount in Amount of Discount.
6. Choose the Bad Debt account as the Discount Account.
7. Click Done, then make sure the correct invoice is checked.
8. Click Save and Close.

Alternative: Credit Memo Method (Desktop)

1. Go to Customers → Create Credit Memos/Refunds.
2. Select the customer and use a Bad Debt item linked to your Bad Debt Expense account.
3. Save the credit memo.
4. Go to Receive Payments and apply the credit to the unpaid invoice.

Important Notes

1. Do not delete the invoice — this removes historical sales data.
2. Sales tax: If you already remitted sales tax on the original invoice, consult your accountant about a possible adjustment.
3. Partial write-offs are allowed — just enter a smaller amount.
4. Cash vs Accrual: Accrual-basis businesses can usually deduct the bad debt. Cash-basis businesses generally cannot.
5. If the customer pays later, you can reverse the write-off with a journal entry or by crediting the Bad Debt Expense account.

Final Thoughts

Writing off an invoice in QuickBooks is simple once you have a Bad Debt Expense account and (in Online) a Bad Debt item set up. Using a credit memo or the zero-dollar payment with discount method keeps your accounts receivable accurate and records the loss correctly. Always review the aging report and check with your accountant before writing off large amounts.

For the full step-by-step process covering both versions in more detail, visit our guide on how to write off bad debt in QuickBooks.