How to write off an invoice

SystemSystem Posts: 381 admin
imageDealing with bad debt: How to write off an invoice

What do you do when you realize an invoice you've issued just isn't going to get paid? Perhaps your customer has gone bankrupt, or there's some other reason you can't collect.
That sucks, and we fe...

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edited November 4, 2019 in Help Center Discussion


  • customlogoshopcustomlogoshop Member Posts: 19

    Where is 'other bank'?

  • SamdSamd Administrator Posts: 557 admin

    Hey @customlogoshop this will depend on which version of Wave you're on. If you head over to Accounting > Chart of Accounts, and select the Add Account option in the top right, you should get a pop up with a number of folders. Then Bank > Cash & Bank > Other Bank. If you're in the more updated platform, selecting the button will have a window where you can fill in details. In these circumstances, just choose Cash & Bank for creating this new account.

  • ryanwinchesterryanwinchester Member Posts: 2

    When I create a new Cash & Bank account it does not show up in the list of accounts to record a payment on.

  • JamieDJamieD Administrator Posts: 1,145 admin

    @ryanwinchester Could you please send us a screenshot of exactly what you see on the Chart of Accounts page (where you added the account) and also, the invoice/bill that you are trying to record a payment on? I just want to get a better idea of what's going on here, and I feel as though this might be beneficial to know.

  • ryanwinchesterryanwinchester Member Posts: 2

    @JamieD So, I did get an account to show up. I archived it and created a new one and that one worked.

    The issue I get even more often is payments throwing an error when I try to record them.

    The other problem with this error is, that they actually are recorded, so if I hit submit three times while getting this error, it will record three payments. And also the invoices will never be marked as paid even though the balance is 0.00.

    This happens on USD invoices 9 times out of 10. About 1 in 10 times the payments succeed.
    All my CAD invoices seem to work fine.

    edited February 15, 2019
  • JamieDJamieD Administrator Posts: 1,145 admin

    @ryanwinchester. That's really strange.. so it will say 'oops there was an issue...' but then still actually record the payment in the transactions page itself? Could you please send a screenshot of exactly what you see in the transactions page after these payments have been giving you an error/showing the duplicates in the transactions page itself?

  • AndyKAndyK Member Posts: 18

    In my case I have a few invoices to write off that are where the customer changed their mind or cancelled for whatever reason, so no service was provided to them or product bought by them. In these cases would it be better to delete the invoices rather than count them as bad debt? Also using cash basis, wouldn't recording payments as bad debt still look like income?

  • pianoteacherpianoteacher Member Posts: 10

    I created a Cash and Bank account called Undeposited Funds which appears on my Chart of Accounts. However when I try to Record a Payment on the invoice (#105), this account is not included in the list of options. The accounts which do appear are my previous Cash and Bank accounts (Cash On Hand and a chequing account) and something called Owner Investment/Drawings. No Undeposited Funds.

  • Sue2381Sue2381 Member Posts: 3

    I have a problem with an underpayment on an invoice of $0.46 that I'm not going to chase! I thought I'd dealt with it by writing it off but on 1st Jan 2019, it popped up again and now I can't balance the Wave account with the bank account. Do I have to treat the $0.46 as 'bad debt' in order to get rid of it? Can someone help/advise please? Thanks.

  • ChickweedArtsChickweedArts Member Posts: 4

    @JamieD I have the same question as @AndyK
    Project was postponed ahead by several months due to a death in the clients organisation, so I'd like to revert the invoice to an estimate until they re-book it. The parameters could change by the time they re-book it, so I'd like to revert it back ot the flexibility of an estimate, without losing all the work I did in engaging with them on the project already. Thank you in advance, for any advice! Since it wont necessarily be the exact same invoice details, when the project reboots, I don't want to file it as a bad debt or to assign it to an un-received funds bank account.
    Is there any way to revert an invoice back to an estimate? Otherwise I think my only option is to delete.

    edited March 11, 2019
  • JamieDJamieD Administrator Posts: 1,145 admin

    @AndyK @ChickweedArts It's entirely up to you here -- however, a lot of the time you won't be able to delete the transaction associated with the invoice (if it's been paid via Wave), and this will need to be done in order to delete the invoice entirely.. hence why we usually recommend the method that's listed in this help centre article. If that is in fact the case (not having the option to delete the invoice) you will need to follow the steps outlined in the article above.. this is the only workaround we have for the time being.

    @pianoteacher Could you please send a screenshot of your chart of accounts section as well as the invoice that you are trying to categorize with that account? I just want to see exactly what could be going on here, and the relativity of the transaction itself.

    @Sue2381 In this case, you would need to treat that unpaid 46 cents as bad debt (since you weren't actually paid that total amount). Following the steps in this article should help with this as well, since the invoice was never fully paid.

  • pianoteacherpianoteacher Member Posts: 10

    @JamieD Today, the Undeposited Funds option did appear when I clicked on Record A Payment. All good!

  • Hearts2Gether4EverHearts2Gether4Ever Member Posts: 0
    I created an deposit/retainer invoice for a customer who has since backed out. How can I delete that invoice from the que?
  • ChelseaKChelseaK Administrator Posts: 262 admin

    @Hearts2Gether4Ever Great question! I suppose it depends on the situation.
    Did your customer actually put down a deposit and then back out? If so, I merged this post with our Help Centre discussion on dealing with bad debt so you can write off the rest of the invoice as bad debt (as outlined by the Help Centre Article).

    If this invoice has only been sent, but no payments applied, you would be good to go and delete the invoice. Head to Sales > Invoice > click on the invoice and then under 'More Actions', you can select 'Delete'. However, it depends on the situation. Did you already give your customer a product or provide them with a service? If so, perhaps writing off the invoice as bad debt would be a more accurate way to represent the situation.

    If you'd like to, more details on the situation, as well as more details on what products or services you provide, would be helpful for us to figure out what would be best!

  • AndyKAndyK Member Posts: 18

    I'm returning to this subject now that I'm actually sorting out my reports and don't like seeing those bad debt expenses in my cash flow report especially as I'm reporting using the cash basis. Those Undeposited Funds count as income which I have to subtract to get my actual cash basis total sales. There's no problem me deleting those old invoices now is there. I could keep PDF copies filed as cancelled invoices.

    I also have one invoice which was actually paid one month and refunded the next. I selected the Refund for invoice category but then that changes the invoice to overdue again. I still have to add the additional payment to Undeposited Funds and then add the Bad Debt expense to balance it all out. This is a nuisance with cash basis reporting.

    edited July 27, 2019
  • ZoeCZoeC Administrator Posts: 388 admin

    Hey @AndyK, thanks for reaching out! I do agree that having to categorize your unpaid/refunded invoices as bad debt is not ideal. I do have an alternative for you, instead of following the "Write it off" process, you can change the amount on the invoice itself to $0, this will essentially clear the invoice and mark it as paid.
    I hope this helps! :smile:

  • AndyKAndyK Member Posts: 18

    @Zoe_caff said:
    Hey @AndyK, thanks for reaching out! I do agree that having to categorize your unpaid/refunded invoices as bad debt is not ideal. I do have an alternative for you, instead of following the "Write it off" process, you can change the amount on the invoice itself to $0, this will essentially clear the invoice and mark it as paid.
    I hope this helps! :smile:

    Thanks @Zoe_caff I'm just dealing with this issue right now :)

    It's that invoice which was paid in full one month but then refunded the next. I assigned the initial payment to the invoice as normal as it was actually income in that month. Then in the next month I categorised the refund payment leaving my bank as a Refund, which of course changes the invoice to owing, so I have to do that Bad Debt workaround which when looking at my reports does inflate the income figures even if it does balance out.

    Are you suggesting I should remove the Bad Debt workaround transactions, edit the invoice value to 0 and then just re-categorise the bank transactions? Can I allocate the payment to a 0 invoice and then also allocate the refund back to it? Just wondering what the best looking solution is :)

  • AndyKAndyK Member Posts: 18

    @Zoe_caff said:
    Hey @AndyK, thanks for reaching out! I do agree that having to categorize your unpaid/refunded invoices as bad debt is not ideal. I do have an alternative for you, instead of following the "Write it off" process, you can change the amount on the invoice itself to $0, this will essentially clear the invoice and mark it as paid.
    I hope this helps! :smile:

    Thanks again, I've tried setting the invoice to 0 and removing the payments plus leaving the item description to CANCELLED. Then I set the bank transfer income transaction to Sales and left it associated to the customer's name, with a mention of the invoice cancellation in the transaction notes. Finally I set the refund transaction to an Owner's Equity withdrawal. That seems to have tidied everything up.

  • AlexLAlexL Administrator Posts: 2,166 admin

    Glad to hear you were able to work this all out @AndyK ! Thanks for providing the steps of how you did it here as well.

  • AndersonAnderson Member Posts: 1

    I want to write off unpaid invoices. There is no "other bank" option to select after clicking add new account. The available options in assets are: cash and bank, money in transit, Expected payments from customers, inventory, property, plant equipment, depreciation and amortization, vendor prepayments and vendor credits, other short term assets, other long term assets

  • BarsinBarsin Administrator Posts: 2,038 admin

    Hey there @Anderson
    We have recently made an update to the article which you can find below! Essentially, you would just want to select the Cash and Bank option and name your account accordingly. Thanks for bringing this to our attention!

  • LTSLTS Member Posts: 2

    I've followed the above steps but my invoices still show an outstanding balance. What did I miss?

  • AlexLAlexL Administrator Posts: 2,166 admin

    Hey @LTS . I'm afraid I'm unable to tell you what you missed without you breaking down exactly how each step went and what you did. I'd advise that you follow along one more time to ensure that all of the steps were done correctly.

  • dewisantdewisant Member Posts: 1

    What if the customer just canceled the order before it was fulfilled and voiding the invoice really is the best practice? How does one do that?

  • AlexLAlexL Administrator Posts: 2,166 admin

    Hey @dewisant . The steps outlined in the article at the start of this thread will still work for your situation. Alternatively, you can also add a new product to the invoice in the amount of the invoice, but with a minus sign in front of the amount. For example, -100.

  • RewildRewild Member Posts: 1

    I had to refund an invoice. In transactions I allocated the refund to the category 'Refund Sent for an Invoice in Wave' and allocated the correct invoice to the transaction. Now the invoice is saying it is overdue. How do I cancel the invoice without deleting it?

  • AlexLAlexL Administrator Posts: 2,166 admin

    Hey @Rewild . I merged your discussion into this Help Center article discussion so you can get more info on how to handle this. Feel free to click into the Help Center discussion itself which appears as the first post in the thread.

  • rdwcrdwc Member Posts: 6

    Why do the official instructions call for making the Undeposited Funds account and then a Bad Debt transaction (2 steps)? Why not just add an "Expense" line item on the invoice equal to the amount being written off? The only disadvantage I see to that is that the customer could click their invoice link and see that it's written off (but in the suggested option, they can click it and see that it's paid in full, which is just as bad?). I don't see what the reporting advantages are to doing the 2-step / 2-account solution, either. What am I missing here? Thanks.

  • AlexLAlexL Administrator Posts: 2,166 admin

    Hi @rdwc . From a reporting stand point, this is the better way to handle it as at year end you'll be able to see what was actually bad debt. You can of course follow the method you stated as well, but this doesn't give you as much of a clear indication in your reports as to where the money went.

  • ianscottgroupianscottgroup Member Posts: 2

    This is not calculating properly for HST. I write off a bad debt of 39.55 which includes 4.55 HST.

    I follow this method, check the box "Include Sales Tax," and save.

    But, when I run the sales tax report, my sales tax owing is not reduced - the 4.55 does not show up either as a decrease in Tax Amount In Sales OR increase in Tax Amount In Purchases.

    I have tried this several times, but the Sales Tax Report numbers don't change.

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