Voiding an Invoice
- Use Case: When an invoice was issued in error, needs to be canceled, or the transaction never occurred.
- Impact on Records:
- The original invoice is marked as void and the amount is reversed.
- No impact on revenue or bad debt accounts.
- May still appear in reports for reference purposes, but with a zero balance.
- Example: You accidentally send an invoice for a service not yet performed. You can void the invoice and create a new one when the service is complete.
Writing Off an Invoice
- Use Case: When you’ve delivered the services but believe the customer will not pay the invoice.
- Impact on Records:
- The original invoice amount is removed from accounts receivable.
- The amount is recorded as a bad debt expense, reflecting a loss.
- Example: You provided consulting services to a client who has filed for bankruptcy and is unlikely to pay the invoice. You can write off the invoice as a bad debt.
