Set off an invoice and bill

Welcome to the Community, Amy. I understand the importance to your business to set off your invoice and bill in your QuickBooks Online (QBO) account, don’t worry I am here to help you go through that process.

We can create a barter transaction to settle your invoices and bills in the program. A barter transaction is used when goods and services are traded between you and a vendor.

Here’s how:

1. Select the Gear icon, then go to Chart of accounts.
2. Tap New to create a new account.
3. Under the Account Type ▼dropdown, select a bank.
4. Choose Cash on hand under the Detail Type ▼ dropdown.
5. Enter the account name, then press Save and Close.

Before proceeding, ensure that you add your partner as a vendor(for the bill) and a customer (for the invoice), as you can't have the same name in both lists. If your business operates on a cash basis, ensure the transaction dates are identical.

Then, we can create an invoice and record its payment to keep your books accurate. Ensure that you use the Barter account when making your payment.

Once done, create and pay the bill. You can follow the steps below to accomplish it:

To create a bill:
 

1. Click + New then select Bill.
2. From the Vendor ▼ dropdown, choose your barter partner.
3. Type all the necessary information.
4. Select Save.

To pay the bill:
 

1. Select +New.
2. Click Pay bills.
3. From the Payment account ▼ dropdown, select your barter bank account.
4. Choose the bill you created earlier.
5. Tap the Make payment under Balance Due.
6. Enter the amount.
7. Select Save and close.

If the goods exchanged aren't equal in value, there will be a balance due or payable.

You might want to visit this guide to learn about recording bank deposits: Make a bank deposit.

If you have further inquiries regarding your payments in QuickBooks Online, feel free to reach out by commenting below. Have a good day!

@Amycao 

@Irene R 's response is incomplete.

Create a bank account in QB called 'Clearing Account'.  Pay the bill using the Clearing Account.  Then, receive payment on the invoice using the same Clearing Account.  The bill and invoice are now both paid and the Clearing Account is $0.