October 9, 2026
Old unpaid invoices before a migration: write them off or carry them over?
The short answer: decide every old invoice before cutover, in the system you are leaving. If a customer is still likely to pay, carry the invoice across as an open item with its original date and amount. If it is dead, write it off in the old file first, so the bad debt expense, any VAT or GST relief, and the records behind them all sit in one ledger. Do not move dead invoices across “to deal with later”; they inflate opening receivables and complicate every reconciliation after it.
Write off, carry over, or clear first
Run an Accounts Receivable Ageing Detail report at your cutover date (Intuit points to this report as the starting point in both QuickBooks Online and Desktop) and sort every open invoice into one of three groups.
| Group | Typical signs | What to do before cutover |
|---|---|---|
| Carry over | Customer still trading with you, on a payment plan, or disputing only part of the amount | Leave open. Confirm the balance with the customer and keep the original invoice date so ageing stays true in the new system. |
| Write off | Customer gone, collection steps exhausted, or the debt is old enough to meet your tax rules for relief | Write off in the old file and keep the support (letters, emails, the decision to write off). |
| Clear first | “Open” only because a payment or credit was never applied | Not a bad debt at all. Apply the payment or credit (see unapplied payments and credits) and re-run the ageing. |
Do the “clear first” group before anything else. Many scary-looking old balances turn out to be payments stuck in Undeposited Funds, not customers who refused to pay.
Why write off in the old system, not the new one
- The tax trail stays in one place. A VAT or GST bad debt claim points back to the original invoice and the tax paid on it. Raise in one ledger and write off in another, and your evidence is split, with the old file possibly read-only by the time anyone asks.
- Opening balances stay honest. Every dead invoice you carry inflates receivables on the new system’s first ageing report and balance sheet.
The tax rules that set the timing
Writing an invoice off and claiming tax relief on it are separate steps, and each country sets its own conditions:
| Where | When relief is available | Where it goes |
|---|---|---|
| UK (VAT) | HMRC VAT Notice 700/18: you have already paid the VAT to HMRC, the debt is written off in your VAT accounts and moved to a separate bad debt account, and it has been unpaid for 6 months after the later of the due date and the date of supply. Claim within 4 years and 6 months. | Box 4 of the VAT Return for the period in which you meet the conditions. Repay the VAT if you later recover the debt. |
| Australia (GST) | ATO: if you account for GST on a non-cash basis, a bad debt adjustment can arise when you write off a debt for a taxable sale, or when it has been overdue for 12 months or more (GSTR 2000/2 has the detail). | A decreasing adjustment on your BAS. A later recovery is an increasing adjustment. |
| Canada (GST/HST) | CRA: you already reported and remitted the GST/HST on the credit sale, you deal with the customer at arm’s length, and you write the amount off as a bad debt in your records. Claim within 4 years of the reporting period in which you wrote it off. | Line 107 of the GST/HST return (line 108 if you file by TELEFILE). A later recovery is added back on line 104 (line 105 on TELEFILE). |
Two points catch people out. In the UK, if you use the Cash Accounting Scheme you only pay VAT on what customers actually pay, so HMRC says bad debt relief is not needed. See UK VAT schemes when you switch. In Australia, the bad debt adjustment rules above are for businesses on a non-cash basis. For Canadian specifics, see GST/HST when switching accounting software. For Gulf VAT registrations, take the FTA or ZATCA rule from your adviser before you write anything off. We have not summarised it here.
Income tax is a separate question again. Whether a write-off is deductible depends on your accounting method and jurisdiction. Intuit itself recommends consulting your accountant before writing off any debt.
How to write it off in QuickBooks
QuickBooks Online (Intuit’s method, updated September 2026):
- Create an Expenses account with the detail type Bad debts.
- Create a non-inventory item (“non-stock” in the UK edition) called “Bad debts” and set its income account to that expense account.
- Raise a credit note (credit memo in the US edition) for the customer using that item and the amount to write off.
- In Receive payment, select the open invoice and apply the credit note to it.
- Run an Account QuickReport on the Bad debts account to check what you have written off.
QuickBooks Desktop (Intuit’s method, updated August 2026): create a Bad Debt expense account, then in Receive Payments enter a payment of zero, open Discounts and credits, enter the amount as the discount and choose the bad debt account as the discount account.
Before posting a batch, check how the tax code behaves on the write-off line in your regional edition, and agree with your accountant whether the VAT or GST adjustment is made through the transaction or on the return.
A pre-cutover checklist
- Run the AR ageing detail at the cutover date and save it as a PDF.
- Clear unapplied payments, credits and Undeposited Funds first, then re-run the ageing.
- Mark each remaining invoice carry or write off, with a reason.
- Check your VAT or GST relief conditions and the period each claim falls in.
- Post the write-offs in the old file and keep the collection evidence.
- Re-run the ageing and trial balance. Those are the numbers the reconciliation at cutover has to match.
Frequently asked questions
Can I just delete old unpaid invoices before migrating?
No. Deleting removes the sale and its tax from periods you may already have filed. Write the debt off with a credit note or discount instead, so the original invoice and the write-off both stay on record.
Will a write-off made in the old system show up in the new one?
Only if you convert history. A move that carries only open items will simply not include the written-off invoices, which is the point. Keep the old file or its reports for your record-keeping period.
What if a written-off customer pays after we migrate?
Record the receipt in the new system against an income or recovery account, and reverse the tax relief the way your tax authority requires: repay the VAT in the UK, make an increasing adjustment on your BAS in Australia, and add the recovered GST/HST back on line 104 of the return in Canada.
Related service: QuickBooks support & file cleanup