Bad debts are outstanding amounts on invoices that will never be paid.  Wiring off an invoice or outstanding amount as a bad debt will keep your accounts in order and no-longer class the invoice as paid.

Writing off a whole invoice.

To write off an invoice or outstanding amount as a bad debt go to Sales > Select the invoice > Click the Refund button at the bottom.  On the next page click Write this invoice off as a bad debt, you’ll then be asked to confirm the bad debts code.  By default we automatically set you up one up and if you’re unsure should just use this.  The bad debts code is a section of your accounts where bad debts are recorded against; this will be reflected on your Profit & Loss report as expenditure. This will now create a new credit note that is fully paid with the negative amount from the original invoice that you are writing off.

Writing off Part of an invoice

You will need to follow the same process as above by going to Sales > Select the invoice > Click the Refund button at the bottom.  On the next page click Write this invoice off as a bad debt, you’ll then be asked to confirm the bad debts code.  You will then have a bad debt invoice for a full amount.  The next thing to do here is to press Edit on the line item of the credit note to make adjustments by entering the net amount of the amount that will not be paid and the VAT to ensure your VAT returns are correct.  Also, under payment details of the credit note, go to Actions > Edit and edit the amount here to be the amount you are writing off rather than the whole invoice amount.  Your credit note should now be marked as paid.