The Goal: Write off an unpaid invoice that is considered bad debt, either from the All Sales/Invoices page in the Billing section or from a contact's Billing tab.
Before You Begin:
- IMPORTANT: You cannot write off an invoice that has already been paid.
- Confirm the invoice is unpaid. Use the filter option on All Sales/Invoices to display only unpaid invoices.
- Do not set the write-off date to a past date — this will negatively impact your accounting records.
Steps to Create a Write-Off
- Go to the Finance, Billing section, and click All Sales/Invoices. Use the filter options to display only unpaid invoices, making it easier to locate the invoice you wish to write off.
- Alternatively, open the member's contact record and click the Billing tab to locate the invoice.
- Click the action icon (⋮ or gear icon) for the invoice you wish to write off, then click Create Write Off.
- Configure the write-off fields:
- Write-off date: Defaults to today. IMPORTANT: Do NOT set this to a past date — doing so will negatively impact your accounting records.
- Notes: Internal use only. This is a required field.
- Purchase Details: Read-only. Displays the invoice details.
- Write Off Items: Displays the fee items on the invoice and their associated accounts. The Write-Off Amount defaults to the original invoice amount. To write off only a portion, enter the partial amount for the items you want to write off and set the others to zero. The Debit Account defaults to the income account associated with the fee item and cannot be changed.
- Click Done to complete the write-off.
Accounting Impact
Cash basis: Revenue was not yet recognized, so no reversing transactions are created.
Accrual basis: A reversing entry is created to "undo" the original adjusting entry. The account selected as the Debit Account will be debited.
Example — Invoice created on 1/1/2020, written off on 8/10/2020:
- On 1/10/2020: Accounts Receivable debited $1,000 / Event Revenue credited $1,000
- Write-off on 8/10/2020: Accounts Receivable credited $1,000 / Event Revenue debited $1,000
Common Pitfalls
- Write-off option not visible: The invoice may already have a zero balance (been paid). Verify the invoice status before attempting a write-off.
- Backdated write-off: Setting the write-off date to the past will create incorrect accounting entries. Always use the current date unless directed by your accountant.
- Partial write-off confusion: If you only want to write off part of the invoice, ensure you set the Write Off Amount for items you do NOT want to write off to zero.