How do I record a bad debt?

If a customer fails to pay, you can use a credit entry with the Bad Debt category to reduce your receivables. This allows you to acknowledge the loss without deleting the original invoice. Common examples include bounced checks or invoices you’ve decided to write off.

Note: This feature is only available in the Business & Personal edition of Quicken Classic for Windows.

What this does

Recording a bad debt creates a credit that offsets the customer’s invoice. It decreases the balance of your invoices/receivables account and classifies the loss as an expense under the Bad Debt category.

To record a bad debt

1. Open the account you use to track this customer’s invoices and payments.

   • You can access this from the Business tab by selecting Invoices and Receivables.

2. Click the Account Actions icon (gear icon), then choose New Credit.

3. In the Credit form:

   • In the Customer field, select the customer associated with the bad debt.

   • In the Business Tag field, choose the same tag used on the original invoice.

   • In the Credit Number field, enter a reference—usually the original invoice number.

   • In the Category field, select or type Bad Debt.

     • If the Bad Debt category doesn’t exist, you can create it as a business expense.

   • In the Amount field, enter the value of the debt to be written off.

4. Click Receive Pmt to open the Customer Payment window.

5. Select Apply Existing Credits to match the credit against the unpaid invoice.

6. Click Save to record the adjustment.

Example

If a customer wrote a $300 check that bounced and never paid, record a $300 credit using the Bad Debt category. This reduces your receivables and accounts for the loss on your profit and loss report.