UNPAID INVOICES

All of this is from QB Help...

If you are using the accrual method of accounting and you extend credit to your customers, as soon as you create an invoice it is recorded in QuickBooks as an account receivable. Unfortunately, you won't always collect all credit you have extended. From time to time you'll have bad debt—money you billed a customer that will never be collected.

Every bad debt has a story and you need to talk to customers who refuse to pay their invoice. Discussing the reason for nonpayment may provide you the information necessary to prevent the problem from occurring again. Be proactive and contact the customer as soon as the invoice is late. You can use QuickBooks to prepare a collection letter.

Generally, you should write off bad debt only after exhaustive efforts to collect. For any significant amounts, you should call the customer until you're convinced the customer can't or won't pay. The rules change if you receive notification that the customer has filed for bankruptcy. At this point the law provides a procedure for filing a claim for payment. Further efforts of collection may violate federal law.

QuickBooks can help you write off an underpayment at the time you receive payments. If an underpayment is applied to an invoice, you will see an option in the Receive Payments window to write off the bad debt right away. The instructions here for tracking and writing off bad debt describe a way to handle underpayments that you don't write off immediately.
At the end of the year, you'll want to write off the outstanding customer invoices you know aren't going to be paid. This will clear the invoice out of Accounts Receivable, increase the balance in your bad debt account, and decrease your net profit by the amount of the unpaid invoice.

Handling bad debt involves two processes:

At the end of your fiscal year, follow these steps to track your bad debt so you can then write it off.

Go to the Reports menu, click Customers & Receivables, and then click A/R Aging Detail.

Go to the Reports menu, click Professional Services, and then click A/R Aging Detail by Class.

Click the Modify Report button at the top of the report.

In the Modify Report window, make sure both the From and To dates are the last day of your year.

Review the report to ensure that everything looks accurate.

The A/R Aging Detail report shows you invoices from customers that were still outstanding as of the last day of your year.

You can QuickZoom (double-click) on any invoice in the report to go to the original transaction.
Loading, please wait . . . Fix any duplicate invoices or any mistakes.

For example, if you find two invoices listed for exactly the same amount and upon examination discover that you've entered two invoices by mistake, delete the second invoice—don't write if off as bad debt. Only write off invoices that are truly bad debt or items the customer refused or is unable to pay.

If customer payments are showing up on this report, there is an error somewhere that you need to solve that problem before writing off bad debt.

The error is generally because the payment didn't get applied to an invoice. This would be the case if you see both a customer invoice and the customer payment listed on the report. To fix or clear both the payment and invoice from the report, double-click the customer payment listed on the report. When the Customer Payment window appears, find the "Invoices paid (with this payment) and those still outstanding" area and add a checkmark by the invoice this payment should be applied to.

If a customer payment is listed on the A/R Aging Detail Report and no invoices appear for that customer, you need to figure out why you received money from that customer and didn't enter an invoice first. You should enter an invoice for the customer and apply the payment to the invoice before proceeding.

If your A/R Aging Detail report is clean, write off bad debt

A clean A/R Aging Detail report shows a list of only what is or was outstanding at the end of your year.

Before writing off bad debt, make sure your A/R Aging Detail report is clean

If necessary, create an account for Bad Debt in your Chart of Accounts.

Go to the Company menu and click Chart of Accounts.

Click the Account button at the bottom of the list and then click New.

Click Expense and then click Continue.

If you are using account numbers, enter the account number in the Number field.

In the Account Name field, enter Bad Debt.

Click OK.

Record the bad debt.
Go to the Customers menu and click Receive Payments.

Select the name of the customer from whom you incurred the bad debt.

Leave the amount field at 0.00.

Click on the line item that will not be paid to highlight it.

Click Discount & Credits.

Your bad debt expense account should already appear in the Discount Account field on the Discounts tab.

Enter the amount of the bad debt in the Amount of Discount field.

Click Done in the Discount and Credits window.

Note: The procedure described above does not affect your sales tax liability.

In the Receive Payments window, save the bad debt transaction.

Please post additional questions or else click SOLVED. Thanks!