How to Cancel an Invoice?
Small companies and large corporations alike often encounter a need to terminate the deals they have signed after the invoice - a document requesting payment for goods sold and services provided - was sent. If you need to properly put an end to a transaction you have negotiated and agreed upon with the client, you can cancel an outstanding invoice or prepare an invoice write off to handle the debt that can never be collected.
How to Cancel an Invoice Issued by Mistake?
Once the invoice is ready, you can send it via traditional mail or e-mail - it is preferable to send an invoice using business e-mail to establish a digital paper trail. Of course, with a uniform template you use in most situations your communication with customers will be more efficient. However, whether you made a mistake in the text of a document or sent an invoice that does not require a payment, you may have to cancel an invoice soon after the notification is delivered to the client. Since the customer has the invoice already, you cannot modify it unilaterally or ask them to forget about it. When you are canceling an invoice, you have to draft a credit memo that will zero out the invoice in question - the latter document will be given a canceled status. Send a copy of a memo to the purchaser to inform them the total balance on their account is reduced or notify them about the chance to get their money back in case the payment was already issued.
How to Cancel an Invoice with a Credit Memo?
To record the cancellation of the invoice correctly, no matter what accounting tools you or your accountant use, the easiest way is to prepare a credit memo - typically associated with an electronic copy of an invoice, this document can cancel the whole transaction or a part of it. You can draft a credit memo to formalize a refund or to cancel an invoice if it contains incorrect details or because either of the parties wants it before the payment was made.
Compose a credit memo indicating the following information: the title "Credit Note" or "Credit Memo", the contact details of the parties, the identification number of the buyer, the date of issuance, the details of the invoice, the reason to cancel the invoice, and the amount of payment to be refunded or terminated. If you draft this document using software built for bookkeeping purposes, there will be an automatic cancellation and the books will show the status of the invoice has changed; alternatively, the customer should be provided with a printed copy of the memo that will serve as proof the invoice no longer must be paid.
How to Cancel a PayPal Invoice?
If you are requesting money from a purchaser using PayPal, it is easy to create an invoice and send it to any e-mail address after customizing the invoice. Nevertheless, it is possible that after you send an invoice using your PayPal account, the client informs you they no longer need the items you were going to deliver or asks you to cancel the transaction because they disagree with certain terms you have listed. In this case, you need to click on Activity in the main menu you see on your account, find the invoice that will not be paid, and click "Cancel" - confirm your intention by clicking "Yes" and the request will be terminated.
How to Write Off an Invoice in Quickbooks?
If you are using Quickbooks to keep track of your accounts payable and receivable, you often create an invoice with the help of this software - starting every document from scratch or preparing a collection of templates for every occasion. If you believe you cannot obtain the payment from the client because they stopped responding to your e-mails or the payment is uncollectible due to another reason, you can write off an invoice in Quickbooks - open Accountant Tools and go to Write off invoices, choose the invoice you want to write off and click Write off, open the drop-down menu to select the account your business uses for uncollectible debts, and click Apply.