This tip walks you through the steps of writing off a bad debt in NetSuite. Bad debts are unpaid invoice amounts that you cannot collect from customers. Writing off bad debt cleans up your accounts receivable register and gives you a more accurate estimate of the payments your company expects to receive.
To accurately write off bad debt for an invoice, you need to create a journal entry, credit the amount of the unpaid invoice to your Accounts Receivable account and debit the amount of the unpaid invoice to your Bad Debt expense account.
Journal Entry Steps:
1. Go to Transactions > Financial > Make Journal Entries (Administrator).
2. In the Entry No. field, accept the default or enter a different number, if possible.
3. Accept or enter a date in the Date field.
4. If you use accounting periods, select one in the Posting Period field.
5. On the Lines subtab:
6. Verify that the Out of Balance field shows 0.00. Verify that the credit amount and debit amount(s) are equal to each other, and are for the exact amount of the invoice. Note: You cannot save a journal entry that is out of balance.
7. Click Save.
Accepting Customer Payment
Accept a Customer Payment with a zero amount, in order to eliminate the invoice for which you do not expect to receive payment from open invoices and aging reports. See Accepting a Customer Payment to Write Off Bad Debt.
To accept a customer payment to credit an invoice for which you do not expect payment:
1. Go to Transactions > Customers > Accept Customer Payments (Administrator).
2. Select the customer with the unpaid invoice.
3. On the Credit subtab of the Apply subtab, check the Apply box for the journal entry you just created.
4. On the Invoices subtab of the Apply subtab, check the Apply box for the unpaid invoice. Verify that the Payment Amount is set to 0.00.
5. Click Save.
Once this payment record is saved, the invoice no longer is included in the Open Invoices report or in A/R Aging reports. You do not need to void the invoice. Note that the payment is not included in the customer payments list page, because the payment amount is now 0.00.