Correct way to handle bad debts/write off with memberships?

[PEIBB]

I run a small business with fitness memberships sold in blocks of time. We start customers off on our introductory membership for 6 months with the goal of upgrading them to a 36 month membership before the 6 months has finished. The 6 month program is entered as in invoice reflecting the eventual full amount due by the end of the program. Members pay monthly, so each time a payment comes it is entered as a receipt against the invoice.

My questions are for when members quit or for when they upgrade to a new membership. When I upgrade the customers, I create a new invoice for the longer membership and start posting monthly fees to the new invoice. For the old invoice, I have been writing this off as a bad debt (following the directions in PT help). I also write off the members who quit as a bad debt. I want to make sure this is the most effective way to handle this situation with memberships or if I should be doing something differently.

Thanks!

[Markr1306]

For the members who upgrade I would issue a CM for the remaoning balance of the 6 months which would be offset to the income. For the members who quit i would continue to write them off to bad debts.

[PEIBB]

What would be the steps to issue a CM for the remaining balance of the membership program for people who upgrade? Would there be a difference in procedures from any other credit memo? How would this remove the upgraded membership from reflecting in Accounts Receivables?

[Markr1306]

issue a credit memo against the the original invoice for the remaining balance

[PEIBB]

THANKS M. Romboli!