Now we are going to apply this Bad Debts Expense credit memo to the open invoice we are going to write off:.For the Product/Service item, be sure to choose that same Bad Debt Expense item you created earlier.Fill out all of the appropriate fields within the credit memo:.Go to: New>Credit memo (underneath the Customers list).IMPORTANT: Before you do this, be sure you don’t have an automation setting in your QuickBooks Online set to “Automatically apply credits”. Now you will create the credit memo for the particular customer whom you want to write off an uncollectible invoice from.So either choose an appropriate account or create a new one (if you don’t already have one). You will need to choose an Expense account (for BOTH the income and expense side of this item) this is important as this is the account where your Bad Debt Expenses will get booked to.This is important because we will be using credit memos (AR stuff) to book things to an expense account. Checkmark BOTH the “I sell this product/service to my customers” choice and the “I purchase this product/service from a vendor” choice.

Name your item “Bad Debt Expense” or something similar.

Click on “New” at the top and choose a Service type of item to create.

Go to the gear icon and click on Products and services underneath the Lists menu.

To get started here, first create the Bad Debt Expense item:

Create a credit memo utilizing a Bad Debt Expense item.

One of the more simpler methods of writing off open uncollectible customer invoices in QuickBooks Online is the following: So, please keep all of this in mind and consult with a Certified Public Accountant before attempting to write off open customer invoices, especially if there are sales tax implications involved. This issue can also be resolved differently if you are an accrual or cash basis tax filer and also if the Accounts Receivables to be written off (to a Bad Debt Expense account) are from previous closed tax and/or fiscal periods. There are different ways of handling the issue of writing off open Accounts Receivables due to customers not paying you for whatever reasons.

Write off credit memo in quickbooks