Write Off Bad Debt Using Cash Receipts and a Bad Debt Direct Expense Account

You can write off a bad debt using a cash receipt to charge the amount to a Bad Debt Direct Expense account.

This method reflects the same philosophy as writing off a bad debt using a negative invoice: only the project responsible for the write-off suffers reduced profitability. But instead of reducing the project's earned revenue and billings, this method increases its expenses, preserving the total amount of billings for the project.

You can see how much the project would have earned if the client had paid the outstanding invoice, and you can view (by project) the amount of the bad debt expense.

To write off bad debt using a cash receipt to a Bad Debt Expense account:

1. Enter a net-zero cash receipt in the Transaction Center.
2. Post the cash receipt in the Transaction Center.