Hello. I have open invoices dating back to 2017 that I know will never be paid. How do I remove or reverse them so they are no longer showing on my system? I tried to "reverse transaction" option by right clicking near the date, then clicked "record reversal" but it remains in my Open Invoices. I am an administrator with full access and the file has been locked from the last financial year
Hi @ The_Interphaser,
You absolutely do not delete them or even reverse them. As Eric3 said you do a negative sale for the amount inclusive of GST, and make sure the tax code shows as GST.
If the realisation that the debt will not be recovered in the same financial year that the sale occurred then you would just allocate the amount to the sales account. If the financial year the sale occurred in has finished then you allocate it to bad debts expense account.
Depending on whether you are Cash or Accruals basis for your BAS as well as for your income tax, you may have already sent this GST off to the ATO and also paid Income tax on the amount.
Some business are cash basis for GST and accruals for Income Tax.
If you know they're not going to be paid, you should write the old invoices off as a bad debt (don't just delete them, it'll play havoc with your sales tax).
You do this by creating a sale and in the amount of the sale, enter the amount of the bad debt as a negative (code it to whatever your bad debt code is). This creates a credit which you can then apply to the bad debt. It also accurately records what your bad debts are so your auditors and business managers can see how much is being written off.
Hi The_Interphaser,
I get how having an open invoice can throw a wrench into your invoicing flow.
Typically, reversing a transaction just flips it to a negative value to balance things out. But if you need to remove the invoice altogether, you might have to delete it. Check out these help articles 'Reversing a Transaction' and 'Deleting a Transaction' for more details.
Depending on what you need, you can tweak your preferences to allow reversals or deletions of transactions.
Feel free to let us know if you require any other assistance.
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Thanks,
Genreve
