Not all businesses require payment from customers when their product or service is delivered. There are many instances in which a business will accept payment afterwards. Unfortunately, this may result in nonpayment or underpayment. If a customer has failed to pay you the full amount for a product or service that your business has delivered, you have one of two options: attempt to collect payment or write it off on your books. Assuming you use the Quickbooks accounting software, you can easily write off accounts payables such as this in just a few steps.
One way to write off accounts payables in Quickbooks is to create a journal entry for the amount of the unpaid invoice. This is done by logging in to your account and choosing Company > Make General Journal Entries. Next, click the “Account” field and choose “Accounts Receivables.” Enter the amount of the unpaid invoice under the “Credit” column and select the customer’s name in the “Customer Name” list. For the next line, enter the offset account and the amount of the invoice that’s still due under the “Debit” column. When you are finished, click “Save & Close.”
After creating the journal entry, you must apply it to the existing debit. This is done by accessing Customers > Receive Payments, at which point you can select the “Customers” menu and click ” Receive Payments.” Next, enter the name of the customer in the box labeled “Received From.” You can then choose the invoice and click “Discounts & Credits” to choose the available credit and click “Save & Close.”
Another way to handle accounts payables is to write them off using discounts. This involves creating a charge off account under Lists > Chart of Accounts > Accounts > New > Income > Minor A/R and A/P Charge-Off.
It’s frustrating when a customer doesn’t pay his or her invoice. But when allowing customers to pay after the product or service has been delivered, this is something that businesses must deal with. The good news is that you it doesn’t have to throw off your books. Overlooking accounts payables means your books will show higher earnings than what your business really made, which can increase the amount of taxes you are required to pay. By handling accounts payables using either of the methods listed here, however, you can prevent this from happening. Just remember to record your accounts payables properly so that it doesn’t throw off your books.
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