The company I work for has been using QBO for 10-plus years but never actually using the system to create billing (all done off-line).

Thanks for posting here, @jack Thompson. Your QuickBooks Online (QBO) account settings can significantly impact various operations, including the process of inactivating entities within the program. Let's dive into more details about this.

Since your company doesn't utilize the program's bill feature, you may have disabled certain settings related to managing expenses and items within your QBO account. If you've encountered the error message when inactivating a client, this setting can affect the inactivation process.

To help resolve the unbilled activity error message you're encountering, let's start by checking your QBO account settings. Here's how:

1. Go to Settings and select Account and settings.  
2. From the left menu, click Expenses.
3. Under Bills and expenses, check if the following are turned on:
   • Track expenses and items by customer.
   • Make expenses and items billable.
4. If not, tap Edit and turn on Track expenses and items by customer and Make expenses and items billable using the toggle switch.  
5. Hit Save when done.

If you track expenses without needing to charge them to anyone, you have the option to label them as non-billable to inactivate a client.

Here's how to mark billable expense charges as non-billable:

1. Go to All sales.
2. Open the Billable Expense Charge.
3. To open the bill, select Bill under marked as billable on this bill. 
4. Find the billable amount under Category or Item details.
5. Uncheck the box in the Billable column and remove the customer's name in the Customer/Project column.
6. Click Save and Close.

For a complete guide to this process, please navigate through this article: Fix error: Customer can't be deleted because there are unbilled charges.

On the other hand, if you encounter the error when inactivating an account in your Chart of Accounts (COA) or changing an employee's status within the program, please let me know. Any additional information about your concern would help us provide an accurate resolution.

This information should help you deactivate outdated entries, @jack Thompson, streamlining your business process with QuickBooks. You can mention my name in the comments below if you want further clarification.

@jack Thompson 

Go to Reports > Standard Reports > Unbilled Charges/Time.  Those two reports will show all unbilled transactions.  Open the transactions and uncheck the billable box.  That should remove the transactions from unbilled status and allow you to make the customer inactive.