How to deal with invoice after dispute and partial payment agreed?

Accounting
1

Hi, we have had a client refuse to pay an invoice. This is down to a dispute between our company and one of his employees who he has since fired. We sent an invoice to the company for the cost price to us. We have since agreed to take a 20% hit just to get some of the monies back. The client has agreed to pay this amount on receipt of an invoice. What is the best way to deal with the invoicing side of things?

Do we credit the original invoice in full and create a completely new invoice? If so, on the new invoice do we copy the original adding a line at the bottom showing a 20% settlement discount, or call it something else? We don’t want to produce an invoice that the client can back with and dispute the wording or agreement.

Any help would be much appreciated.

2

I would just apply a partial credit note against the balance to reduce it by 20%. Or go into the original invoice, add a new line and enter a negative amount to reflect the agreed discount.

3

Thanks Glenn. I will have to issue a partial credit note as I can no longer the modify the original invoice as it has been locked in.