How to Write Off Customer And Vendor Balances In QuickBooks

In QuickBooks accounting software, while making transactions you might find small balances as of the outcomes of overpayment and major error issues. It is necessary to clear all those little payments from your account rather than to sum up or collect. This article will provide methods by which you can fix this issue as soon as possible. Make sure, you consult with the accountant holder before going with any of the below methods. 

How to Write Off Customer And Vendor Balances In QuickBooks

There are two recognized methods to write off customer & vendor balances in quickbooks. The 1st one is by making a journal entry & the second one is by utilizing the Discounts.

Method 1: Make a General Journal Entry to Write Off the Amount

For Customers

Accounts Receivable

• Make the appropriate Journal entry 
• Locate the Company Menu and select the “Make General Journal Entries”
• From the current window, edit the date and enter the entry number, if it is required.

For Customer With Over Payment

• Hit your first click on  the “Account Field” and then go to the “Accounts Receivable” from the drop-down menu
• Write the amount under the “Debit Column” option and then click on the “Name Column” 
• Now, you have to choose the “Customer Name” from the drop-down preferences
• Enter your next click on the “Offset Account” and then go to the next line to put the amount under the credit column.

For Customers With Under Payment

• To begin the process, you have to choose the “Account Field” and then click on the “Accounts Receiveable” option
• Go to the “Credit Column” and then write “Amount” then hit your next click on the “Name Column” and select a Customer Name from the drop-down menu
• After that, choose the offset account and then write the amount under the Debit option
• Click on Save & Close.

You can apply the General Journal Entry to your existing  Debit/Credit

• The first thing you have to do open the “Customer Menu” and then select the “receive payments”
• Then, go to the received form and write the “Customer Name”
• Choose the “Invoices” option and then select the “Discounts & Credits”
• Proceed forward and select the available credit and then click on the “Done” in the credit section
• Select Save & Close.

For Vendors

Accounts Payable

• Make an appropriate journal entry
• Then, you have to go to the “Company Menu” option and enter your click on the “Make General Journal Entries”
• After that, you can change the date and write the “Entry Number” if it is needed.

For vendor with overpayment

• Enter your first click on the “Account Filed” and then choose the “Accounts Payable” option
• Then, go to the credit column and write the “Amount” and choose the “Name Column” option and hit the click on the “Vendor Name”
• Select the offset account and then go to the next line to enter the amount  under the Debit column.

For vendors with underpayment

• Firstly, select the “Account Field” section and choose the Accounts Payable option 
• Then go to the Debit column and write the Amount then next go to the “Name column” and then select the Vendor name from the drop-down menu
• Then, select the offset account, go to the next line and write the amount under the credit column
• Click on Save and close.

You have to Apply the journal entry to existing credit/debit.

• The first thing you have to do open the Vendors menu and click on the “Pay bills”
• Choose the bill and proceed further to select the Set Credits
• Hit your click on the available credit and for further processing click on Done 
• Then click on Save & Close.

Method 2: The second option is to utilize the Discounts To Write Off Small Amounts

• The first thing you have to do is create an account and item to utilize while writing off small amounts
• Then make a charge off the Account
• The next thing is to do to choose the “List Menu” and choose “Chart of Accounts”
• Locate and click on the “Account” option and then choose “New”
• Select “Income” and continue
• Go to the accounting field and then write minor A/R and A/P (Select A/R for customers and A/P for vendors)
• Click on Save & Close.

Now create a Charge-off item.

• Open the list menu and hit your click on the “Item List”
• Select the item button and click on the “New” option
• Then you have to select the “other Charge” option as the item type 
• Click on Continue and then enter the “Minor Charge-off” in the item name or number as per the requirement.
• Select the Non-Taxable Sales option from the Tax Code
• Go to the Account Field and select the Minor A/R and A/P (Select A/R for customers and A/P for vendors)
• Now, click on the OK button to save and create the item
• After that, select the situation that shows about you that small amount that needs to clear

For Customers

Customer Underpayment

• To do customer underpayment you have to choose the “Customer Menu” first and then select the “Receive Payments”
• Then choose the customer name in the Receive from field
• Then, you have to select that invoice that you want to write off the amount

Choose the Discount tab with the below steps

• To choose the discount tab, you have to write amount in the “Amount of Discount” section
• Then select the Minor A/R and A/P charge off in the Discount Account
• Then, click on Done to exits from the discounts and credits
• Click on Save & close option and you get exit from the receive payments 

Customer Overpayment

• To figure out this issue, you have to open the “Customer Menu” and then choose the “Create Invoices” option
• Now, you have to open the “Customer Job” option, and then choose “Name of the customer”
• Enter your next click on the “Minor Charge-off” from the item filed and then write the overpayment amount
• Click on the “Apply Credits”
• Go to the credit session and choose the Available credit (The amount of credit is similar to the amount of invoice)
• Hit your next click on “Done” to close the Apply credits
• Click on Save & close to get exit from the create invoice

For Vendors

Vendor Underpayment

• First of all, open the vendors’ menu and choose the “Pay Bills” option
• Then choose that specific bill that has a balance that you want to write off
• You have to choose “Set Discount” and click on the “Discount tab”
• Now, you have to write the amount in the Amount of Discount
• After that, select the A/R and A/P charge-off in the Discount Account
• Hit your click on Exit to get exit from “Discount & credits”
• Select the “Pay Selected Bills” to exit from pay bills
• Enter the last click on the “Payment Summary Window”

Vendor overpayment

• You have filled a bill that will offset the credit
• Then, open the Vendors menu and select the “Enter Bills”
• Then click on the “Vendor” option
• Open the item field and choose the Minor charge off option under the items tab
• Click on Save & Close

Now you have to apply on the available credit to the bill that you created.

• Locate and open the Vendors menu and choose the “Pay Bills” option
• Select the bill that you have to enter to offset the credit
• Then, click on “Set Credits” and choose the credit tab to select the credit
• Click on the Done button to get exit from the “Discounts & Credits”
• Now, you have to select the “Pay selected bills” to exit from the pay bills
• Now, all you need to do to choose the Done in Payment summary.

FAQ

How to write off overpayment in QuickBooks Desktop?

To write off an overpayment in QuickBooks Desktop:

1. Go to the customer’s account. 
2. Create a credit memo for the amount of the overpayment. 
3. Apply the credit memo to the customer’s open invoice, and the overpayment will be written off.