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Available on: Patriot Accounting (Accounting Basic and Accounting Premium)
If a customer isn't going to pay an outstanding invoice, you can mark it as Bad Debt in Patriot Accounting. This writes off the remaining balance so the invoice no longer appears as money owed in your Accounts Receivable reports.
How to Mark an Invoice as Bad Debt
Go to Accounting > Receivables > Invoices.
Find the invoice you want to write off.
Click the three-dot menu (...) next to the invoice.
Select Mark as Bad Debt.
Review the remaining balance and select a Bad Debt Expense Account.
Click to confirm the write-off.
Things to know:
You can mark invoices as bad debt if their status is Saved, Sent, Emailed, or Partially Paid.
For partially paid invoices, the entire remaining balance is written off. You cannot write off only part of the remaining balance.
Draft, Paid, Voided, and existing Bad Debt invoices cannot be marked as bad debt.
What happens when you mark an invoice as bad debt?
After you mark an invoice as bad debt:
The invoice status changes to Bad Debt.
The remaining balance is written off.
The invoice is removed from Accounts Receivable Aging reports.
The invoice can no longer receive payments or credits while marked as bad debt.
Any existing Stripe payment link is disabled.
An accounting entry is recorded in the General Ledger for accrual accounting.
You can still find the invoice in your Invoice List by filtering for Bad Debt.
Where Bad Debt Invoices Appear After the Write-Off
After you mark an invoice as bad debt, the invoice appears this way across Patriot Accounting:
Where (and how to get there) | How bad debt invoices appear |
Invoice List and the customer's Invoices tab | Shows a Bad Debt status badge. Bad Debt is in the status filter and checked by default; uncheck Bad Debt to hide bad debt invoices. Bad debt amounts count toward Total Amount but not toward Balance Due - Unpaid. |
Invoice Detail page | Shows a BAD DEBT status badge, with "Marked as Bad Debt" and the write-off date in red below the Invoice Total. Available actions are Print, Duplicate, and Remove Bad Debt. |
Customer Invoice Detail Report | Hidden by default. Click Show Paid, Voided & Bad Debt Invoices to display bad debt invoices. The bad debt amount is left out of the report totals. Payments or credits applied before the write-off still show in their own total lines. |
Accounts Receivable Aging Report | Left out completely, from every aging bucket and the report totals. |
Apply Credit to Invoices | Bad debt invoices are not listed. |
General Ledger, Balance Sheet, and Profit and Loss (accrual reports) | The bad debt journal entry moves the remaining balance out of Accounts Receivable and into your bad debt expense account. Revenue is not reversed. |
Cash and modified cash reports | The bad debt journal entry does not appear. |
Invoiced Sales Tax Report | For invoices with sales tax, adds a negative line for the written-off taxable sales and sales tax in the same tax jurisdiction as the original invoice. |
Accounts Receivable reconciliation | Shows the bad debt journal entry as "Bad Debt Write-Off for (Customer Name) (Invoice #)." |
How to Remove Bad Debt Status from an Invoice
If the customer pays later or you wrote off an invoice by mistake, you can remove the bad debt status.
Go to Accounting > Receivables > Invoices.
Find the invoice marked Bad Debt.
Click the three-dot menu (...).
Select Remove Bad Debt.
Choose Void Bad Debt or Delete Bad Debt.
Confirm your selection.
What's the difference between Void and Delete Bad Debt?
Action | When to use it | What happens |
Void Bad Debt | The write-off was valid, but the customer later pays. | Reverses the write-off while keeping the original transaction and a record of the reversal. |
Delete Bad Debt | You marked the invoice as bad debt by mistake. | Removes the original bad debt accounting entry without creating a reversing entry. |
Important:
When voiding bad debt, you can select a void date. The date cannot be earlier than the invoice date.
You cannot delete a bad debt transaction that has been reconciled.
What happens after you remove bad debt?
Whether you void or delete the bad debt write-off:
The invoice returns to its previous status, such as Sent or Partially Paid.
The remaining balance becomes outstanding again.
The invoice reappears in Accounts Receivable Aging reports.
Any previous Stripe payment link is reactivated.
The invoice's Status History records the change.
For more information about transaction actions, see Void, Delete or Edit Transactions: What's the Difference?.
Bad Debt Write-Offs and Sales Tax
Some states allow businesses to recover sales tax they paid on invoices that were never collected.
To see the sales tax associated with written-off invoices:
Go to Reports > Accounting > Customer Reports > Sales Tax.
Select Invoiced as the report type.
Run the report.
Patriot shows the written-off sales tax as a negative amount on the Invoiced Sales Tax Report.
Important: Patriot does not file sales tax bad debt recovery claims. Contact your state's tax agency to find out whether you're eligible to recover the sales tax.
Bad Debt Invoice FAQs
Q: What's the difference between voiding an invoice and marking it as bad debt?
Void an invoice: Cancels the invoice as though the sale never happened.
Mark as Bad Debt: Keeps the sale and revenue on your books but records the unpaid balance as a bad debt expense.
Use Mark as Bad Debt when the sale was legitimate, but you don't expect the customer to pay.
Q: Will my customer be notified if I mark an invoice as bad debt?
No. Patriot does not notify customers when an invoice is marked as bad debt.
Any existing Stripe payment link becomes inactive.
Customers who click an old payment link will see Stripe's inactive link page.
Q: Can I edit an invoice that's marked as bad debt?
No. You must remove the bad debt status before making changes.
While an invoice is marked as bad debt, you can only:
Print the invoice.
Duplicate the invoice.
Remove Bad Debt.
To edit, void, delete, or record a payment on the invoice:
Go to Accounting > Receivables > Invoices.
Find the invoice and click the three-dot menu (...).
Select Remove Bad Debt.
Void or delete the bad debt write-off.
Make your changes or record the payment.
Q: Why isn't my bad debt write-off showing on my Profit and Loss report?
Bad debt write-offs only appear on accrual-basis financial reports.
To view the write-off:
Go to Reports > Accounting > Financial Reports > Profit and Loss.
Set the Accounting Basis to Accrual.
Run the report.
Bad debt write-off journal entries do not appear on cash-basis or modified cash-basis financial reports.