Skip to main content
W
W012
February 28, 2025
Question

Applying Payments & Credits to Job/Sub-Customer Invoices

  • February 28, 2025
  • 1 reply
  • 0 views

We have a few customers who each have several hundred retail locations, and each location orders and is billed as a job/sub-customer, but the corporate headquarters (parent customer) issues combined payment -  which we receive in QB and then apply to the numerous jobs/sub-customer invoices with no problem.

 

However, when the parent company is due credits and deduct them from a payment that needs to be applied to multiple sub-customer invoices, the credit memo requires 2 general journal (GJ) entries in order to apply it to job/sub-customer invoices. Why does QB require these GJ's for applying credit memos to sub-customer invoices, but does not require this for applying payments to sub-customer invoices?

As an example:  

30 stores (jobs/sub-customers) order $1,000 of product each ($30,000 total)

We ship and invoice each order separately per customer's requirement (30 job/sub-customer invoices)

Approximately 3 weeks later, we receive a payment from the corporate office 

The payment identifies all 30 invoices but also several deductions from payment:

invoice payments = $30,000

payment deductions = - $10,000  

Net Check Amount = $20,000

We apply the $20,000 to 20 jobs/sub-customer invoices; everything applies directly with no problem.

We create a credit memo under the corporate company (parent customer), but in order to apply it to the 10 remaining job/sub-customers accounts, we have to open each invoice separately, then select apply credits, QB then creates a general journal entry moving the credit Out of the parent customer account, and then a 2nd general journal entry moving it Into the job/sub-customer account to apply it to the invoice. 

Question:

Why will the credit memo not apply directly from parent to job/sub, like the payments do?

Is there something we should do differently in creating the credit memo??

1 reply

Rainflurry
Rainflurry
February 28, 2025

@W012 

 

The reason payments apply automatically but credits don't is because you aren't reclassifying anything when you receive a payment.  Remember, you're creating a credit memo for the parent FIRST and THEN applying it to jobs which requires a reclassification of A/R.  If you received payment to the parent FIRST and THEN wanted to apply it to jobs, you'd have to do the same.  In your case, you're selecting what invoices to apply the $20K payment to, so it's an easy debit entry to the deposit account and a A/R credit to the job's invoice you select with the checkmark.  However, when you create a credit memo under the parent, QB needs to reclassify the A/R credit from the parent to the job, which is why there are journal entries (JEs) for each credit.  QBE won't allow two A/R lines on the same JE so it makes one JE to move the credit from the parent to a temporary Credit Transfer account and a second JE to move it from the Credit Transfer account to the job .      

 

Also, there's no need to open each invoice to apply the credits.   When you want to apply the credits across multiple invoices, go to Customers > Receive payments > select the parent > select an invoice you want to apply part of the credit to > click "Apply Credits" > select the available credit (QB will automatically apply the full invoice in the "AMT. TO USE" column) > Done.  Repeat for each subsequent invoice.  Not sure that saves a ton of time but it's easier than opening each invoice I think.  AFAIK, there's nothing different you can do when creating the credit memo under the parent but wanting to apply it to jobs.  

W
W012Author
March 3, 2025

Thank you, Rainflurry. That all makes sense.

Terms & ConditionsAccessibility statement