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Skypilot65
January 3, 2024
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Notes Receivable and Invoicing in QB Desktop

  • January 3, 2024
  • 1 reply
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I'm absolutely stumped on how to achieve creating a note receivable for a customer and invoicing them for their monthly payment. What apparently seems fairly easy has become an absolute nightmare. The note is for some seller financing on a piece of property I recently sold. I've created a new account called "Loan-Customer 1" as an other asset and provided it with the principal balance of the loan and set the company as the AR. I created two new list items called "Monthly Interest" and "Monthly Principal". For each of the new list items I've associated different accounts "Interest Income" an income account and "Loan-Customer 1" respectively. The problem is that when I go to invoice the customer using the new list items the deduction from principal is the full invoice amount, not just the principal amount. QB Support has indicated that QB cannot separate the application of the line items by account type and that the whole invoice amount is applied. I must be doing something very wrong as it really doesn't make any sense. Any help would be greatly appreciated. Thanks.

Best answer by Rainflurry

Hi @AbegailS_,

 

The item "Monthly Interest" account is assigned to "Interest Income". The item "Monthly Principal" account is assigned to "Loan - Customer 1".

 

The utility to verify the data found no problems.

 

This seems to be an issue where the items included on the invoice are not being appropriately applied to the correct accounts. A bug???? This is very frustrating as even Quicken can do this simple task easily, its called "Splits".

 

Thanks.


@Skypilot65 

 

I have done this many times so something seems off.  This should work just fine if you're putting two line items on the invoice:

 

Line item #1 - 'Monthly Principal' assigned to your 'Loan - Customer 1' Other Asset account.

Line item #2 - 'Monthly Interest' assigned to your 'Interest Income' Other Income account.

 

When you invoice the customer, QB creates a journal entry that debits (increases) A/R and credits (increases) interest income and credits (reduces) your note receivable asset account.  There is no reason this shouldn't be working properly.  

 

To see what's happening behind the scenes, go to the invoice and click on the 'Reports' tab, then click on 'Transaction Journal'.  Under the 'Account' column, you will see what accounts are being hit.  I suspect what you will see is the note receivable asset account is the only account being hit.  If you still need help, post a screenshot of the Transaction Journal report.    

1 reply

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Carneil_C
January 4, 2024

Hi, @Skypilot65.

 

I'd be glad to help you manage note receivables and invoicing in QuickBooks Desktop.

 

To achieve your goal, you can set up and use the progress invoicing that allows you to split estimates into as many invoices as you want. This lets you invoice your customers monthly for their payments.

 

As you complete work, add items from the initial estimate to progress invoices. This keeps project payments organized and connected from start to finish. Once ready, you can follow the process below.

 

First, enable the progress invoicing feature if you haven't already. Here's how:

 

  1. From the File menu, select Switch to Single-user mode.
  2. Go to the Edit menu and click Preferences.
  3. Select Jobs & Estimates from the list of menus.
  4. Select the Company Preferences tab.
  5. Tick Yes in the DO YOU CREATE ESTIMATES? section. Then select Yes in the DO YOU DO PROGRESS INVOICING? section.
  6. Hit OK to save and close your preferences.
  7. Return to the File menu and select Switch to Multi-user mode if you need to.

 

Once done, create invoices from your estimates by following Step 2 in this article: Set up and send progress invoices in QuickBooks Desktop. This includes the following detailed process.

 

For future reference, I have an article to help you account for your customer payments: Receive invoice payment.

 

Feel free to revisit the Community if you have more questions about invoices or other QBDT-related tasks. I'm determined to help you succeed. Keep safe always.

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Skypilot65Author
January 4, 2024

Hi @Carneil_C ,

 

I appreciate the reply but I don't know that doing estimates/quotes and then invoicing those progressively solves the problem. Let me explain:

 

I have two defined items in my list that have to be on each invoice "Monthly Interest" which is assigned to the account "Interest Income" and is defined as an income account, and "Monthly Principal" which is assigned to the "Loan - Customer 1" account (an other asset). The "Monthly Interest" must be accumulated in the account "Interest Income" on an annual basis. The "Monthly Principal" must be deducted from the "Loan - Customer 1" asset account. The problem is that the invoice total is deducted from the asset account. 

 

Example:

Interest = $500

Principal = $100

Invoice Total = $600

 

"Loan - Customer 1" account starts with $100,000 is reduced by $600 that results in $99,400, not the principal amount $100 which should result in $99,900.

 

I can't be the only person who using QB and doing seller financing (acting as the bank on a mortgage) on a property that was recently sold. Each month the principal and interest values change based on the amortization schedule and need to be invoiced accordingly, even though the total monthly payment remains the same.

 

Thanks.

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