pay a vendor invoice with a credit from a customer

Hi there, @SB719. 

I want to make sure you're able to apply the credit that your customer paid on your behalf in QuickBooks.  

Since the customer pays 3rd party supply on your behalf, you'll need to receive payment against the customer invoice and deposit those "funds" in the cash account. We select the cash account as the payment source. 

Here's how:  

1. Click Customer menu, choose Receive Payments.
2. Choose the customer name.
3. Select the invoice and enter the amount that the customer is paying.
4. Hit Un-Apply Payment.
5. Tap Save & Close.

Create a clearing account:

1. Hit Lists menu, press Chart of Accounts.
2. Choose the Account drop-down and tap New.
3. Under Income use as the account type and select Continue.
4. Select Clearing as the account name and hit Save & Close.

 Create two journal entries to move customer balance to your vendor:

1. Press the Company menu, select Make General Journal Entries.
2. Assign Date and Entry No. if needed.
3. The first journal should be Credit to Accounts Receivable and Debit to Clearing account. Make sure to select the right customer in the Accounts Receivable line. 
4. The second journal should be Debit to Accounts Payable and Credit to Clearing account. Make sure to select the right vendor in the Accounts Payable line. 

Apply credit to the vendor's bill:

1. Under Vendors menu, tap Pay Bills.
2. Choose the appropriate vendor and bill.
3. Hit Set Credit. 
4. Press the appropriate credit and select Done.

Though, please be sure to reach out to an accounting consultant to ensure this method is the best suit for your business. 

If there's anything else you need from me, feel free to comment below. I'm always here to help in any way I can. Have a great rest of your day!