Skip to main content
C
Childcare Company
November 5, 2018
Question

HELP - How do I record a payment made on behalf of a customer?

  • November 5, 2018
  • 4 replies
  • 0 views

Hi,

I need help recording a few transactions. I am the parent company (corporate office) for a few daycares.  We recently purchased a radio ad for our area.  These ads will be an expense for the daycares.  However, the radio company requires one big lumpsum payment therefore I paid for this upfront from the corporate account.  Each daycare will now pay the corporate account back for these ads. How do I show this on my books?

4 replies

BettyJaneB
BettyJaneB
November 6, 2018

Hi there, Childcare Company.

Welcome to the Community. Helping you with recording a payment on behalf of the customer in QuickBooks Online is my priority.

 

When receiving a payment from a collection agency on behalf of the customers, you can set up the collections agency as a customer so you can keep track of the payments.

 

Here's how:

  1. Choose Sales and then Customers at the top.
  2. ​Select New customer.
  3. Enter the collections agency's information.
  4. Select Save.

After that, you'll need to enter a Journal Entry to distribute the payment from the collections agency to the correct customers.

To do that:

  1. Select the Plus icon (+) at the top and then Journal Entry.

  2. Enter the Date the payment was received.

  3. On the first line, select the Account drop down and choose Accounts Receivable.

  4. In the Debit field, enter the full amount of the payment.

  5. In the Memo field, note the reason for the journal entry.

  6. Select the Name drop down and select the collections agency name. 

  7. On the second line, select the Account drop down and select Accounts Receivable.

  8. In the Credit field, enter the payment amount for the first customer.

  9. Select the Name drop-down and choose the name of the customer where the payment is being transferred. 

  10. After all the customer payments are distributed, select Save.

This journal entry will create an open balance for the collections agency and list a credit to the customer's account.

 

Now, you'll have to enter the payment from the collections agency to deposit the funds and clear out the collections agency balance you just added.

 

Here's how:

  1. Choose the Plus icon (+) and then Receive Payment.
  2. For Customer, select the collections agency.
  3. Enter the collection Payment date and for Amount received, enter the total of all the cleared outstanding balances.
  4. Under Outstanding Transactions, make sure the appropriate amount are checked off.
  5. If you have to deduct commission from the total amount paid, mark the deposit account as Undeposited Funds.
  6. Select Save.

However, if the collections agency deducted a commission, you can record that when you make the deposit, you'll need to follow these steps:

  1. Choose the Plus icon (+) at the top and then Bank Deposit.
  2. Under Select the payments included in this deposit, select to mark the amount listed for the collections agency.
  3. then, add the commission, under Received From, select the collections agency.
  4. For Account, select the expense account where you record your collection fees.
  5. Under Memo, enter a note such as "Commission fee for collections".
  6. Under Amount, enter the amount of the commission fees as a negative ( - ) number.
  7. Make sure the Deposit Total matches the actual amount you received from the collections agency.
  8. Select Save.

Lastly, apply the credits created by the journal entry to close the customer's outstanding charges.

 

Here's how:

  1. Choose the Plus icon (+) at the top and then Receive Payment.
  2. Select the customer with the appropriate outstanding balance.
  3. Enter the Payment date you want to show the payment received by, but leave blank the Amount received field.
  4. Next to Credits, select the plus + sign and choose the journal entry entered for the collections agency.
  5. Under Outstanding balances, select the appropriate open invoices.
  6. Select Save.
  7. Repeat the process until all the open invoices paid by the collections agency are closed.

That should guide you on your way to successfully record the payment made on behalf of a customer on your QuickBooks.

 

Please let me know if you have any questions about these steps. I'll make sure to get back to you as soon as I can.  Have a wonderful day.

Andrea31
Andrea31
December 16, 2018

Hello. I was following your steps to record a payment made on behalf of a customer as I received payment from a collections agency and I ran across an issue that I am hoping you can help me with. I created a new customer using the collection agency info. Then I went to create a journal entry.

In your first step of entering a Journal Entry to distribute the payment from the collections agency to the customer, you state to Debit - Accounts Receivable and select the collection agency from the Name drop down. Then on the second line you say to Credit - Accounts Receivable and select the customer whose invoices were paid by the collection agency in the Name drop down.. Quickbooks will not allow 2 - AR or AP accounts in one Journal Entry. What do you suggest I credit instead? I have tried a couple other of my accounts, but they did not create a credit on the customer side that I need to pay the invoices on. Thank you.

A
Anonymous
December 17, 2018

It's lovely to see you here in the Community, Andrea31,

 

I'm here to help you create a journal entry for your payments distribution.

 

May I know if you're using QuickBooks Desktop? If so, there's a different process to transfer your customer payments from one customer to another.  The steps above only apply to QuickBooks Online. Let me get you on the right track.

 

First, you'll need to create a wash account, so you can move the money from one account to another when you cannot do it directly.

 

Once done, you can create a journal entry to transfer the amount from the collection agency to the clearing account. Here's how to that:

 

  1. Go to the Company tab.
  2. Choose Make General Journal Entries.
  3. On the first line, debit the Accounts Receivable with the amount to be transferred then add the customer name in the Name column.
  4. On the next line, credit the Clearing Account.
  5. Click Save & Close.

Once done, you can now link the payment to the journal entry. Let me guide you on how to do that:

 

  1. Go to the Customer tab.
  2. Select Customer Center.
  3. Choose the customer you're transferring the payment from, then go to the Transactions tab.
  4. Double click the payment and mark the journal entry.
  5. Click Save & Close.

After linking the payment, you'll need to create another journal entry to move the payment from the clearing account to the customer. Please follow the steps below:

 

  1. Go to the Company tab then choose Make General Journal Entries.
  2. Credit Accounts Receivable with the amount to be transferred then select the customer name in the Name column.
  3. Debit the Clearing Account.
  4. Click Save & Close.

Lastly, you can now apply the credit to the unpaid invoice. Here's how:

 

  1. Go to the Customers tab.
  2. Choose Receive Payments.
  3. Select the customer you're transferring the payment to.
  4. Mark the appropriate invoice and select Discounts & Credits.
  5. Go to the Credits tab and select the credits you want to apply.
  6. Click Done.
  7. Click Save & Close.

That should point you in the right direction, @Andrea31. You may want to check this article to know more about the process. This contains a series of screenshots to guide you.

 

Please feel free to update me if you need further assistance. I'll be your personal QuickBooks guide. Have a good day!


 

    vpcontroller
    vpcontroller
    November 6, 2018

    @Childcare Company

     

    On the parent's books, create a new "Due from Daycares" as a parent account. You can then create subaccounts for each daycare center under the parent account.

    To create new accounts: From the Dashboard > Accounting > select Chart of Accounts > Select New >
    Account Type = Other Current Assets
    Detail Type = Other Current Assets

     

    "However, the radio company requires one big lumpsum payment therefore I paid for this upfront from the corporate account."
    Just split payment transactions using these accounts.

     

    "Each daycare will now pay the corporate account back for these ads."
    When you receive the payments, use these accounts.

     

    You can View Register balance with transactions. Just go back to the Chart of Accounts to review those accounts.

     

      G
      GodzChlyd
      August 24, 2024

      To record a payment you made on behalf of a customer in QuickBooks Online, where the customer will reimburse you later, follow these steps:

      1. Record the Payment to the Supplier

      • Go to the "Expense" or "Check" section in QuickBooks.
      • Create an Expense or Check:
        • Select the bank account you used to make the payment.
        • In the "Payee" field, choose the supplier.
        • In the "Category" section, select the appropriate expense account (e.g., "Cost of Goods Sold" or "Purchases").
        • Enter the amount you paid.
        • Save the transaction.

      2. Create a Billable Expense for the Customer

      • Edit the Expense or Check:
        • Find the transaction you just recorded.
        • In the "Item Details" or "Account Details" section, add a new line item:
          • Select the appropriate expense account.
          • Check the "Billable" box.
          • Enter the customer name in the "Customer" field.
        • Save the changes.

      3. Invoice the Customer

      • Create an Invoice:
        • Go to the "Customers" section and select the customer you paid on behalf of.
        • Create a new invoice.
        • QuickBooks will prompt you to add the billable expense to the invoice.
        • Add the billable expense to the invoice.
        • Review the invoice to ensure everything is correct, then save and send it to the customer.

      4. Receive Payment from the Customer

      • Once the customer pays you, record the payment against the invoice.

      Summary:

      • Expense: Record the payment to the supplier as an expense or check.
      • Billable: Mark it as billable and assign it to the customer.
      • Invoice: Invoice the customer for reimbursement.
      • Payment: Record the customer payment when received.
      G
      GodzChlyd
      August 24, 2024

      To record a payment you made on behalf of a customer in QuickBooks Online, where the Customer will reimburse you later, follow these steps:

      1. Record the Payment to the Supplier

      • Go to the "Expense" or "Check" section in QuickBooks.
      • Create an Expense or Check:
        • Select the bank account you used to make the payment.
        • In the "Payee" field, choose the Supplier.
        • In the "Category" section, select the appropriate expense account (e.g., "Cost of Goods Sold" or "Purchases").
        • Enter the amount you paid.
        • Save the transaction.

      2. Create a Billable Expense for the Customer

      • Edit the Expense or Check:
        • Find the transaction you just recorded.
        • In the "Item Details" or "Account Details" section, add a new line item:
          • Select the appropriate expense account.
          • Check the "Billable" box.
          • Enter the customer name in the "Customer" field.
        • Save the changes.

      3. Invoice the Customer

      • Create an Invoice:
        • Go to the "Customers" section and select the Customer you paid on behalf of.
        • Create a new invoice.
        • QuickBooks will prompt you to add the billable expense to the invoice.
        • Add the billable expense to the invoice.
        • Review the invoice to ensure everything is correct, then save and send it to the Customer.

      4. Receive Payment from the Customer

      • Once the Customer pays you, record the payment against the invoice.

      Summary:

      • Expense: Record the payment to the Supplier as an expense or check.
      • Billable: Mark it as billable and assign it to the Customer.
      • Invoice: Invoice the Customer for reimbursement.
      • Payment: Record the customer payment when received.
      Terms & ConditionsAccessibility statement