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bcreative
December 3, 2020
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I have a vendor that is also a customer. I owe the vendor more than they owe me. Can I pay the vendor bill for the net amount due after deducting what they owe me? How?

  • December 3, 2020
  • 3 replies
  • 0 views
Bill is for $1000, Invoice is for $100. I want to pay them $900 and clear both the Bill and Invoice.
    Best answer by MarsStephanieL

    Hi there, @bcreative.

     

    I'd be glad to help you deduct the invoice payment amount from your bill payment from the same person through a Journal Entry.

     

    First, create a Journal Entry transaction, Credit the $100 to the Accounts Receivable account on the first line, and on the second line Debit it from the Accounts Payable account. Then, create a Receive payment transaction to apply the amount from the Journal entry to the invoice. Once done, you can create a Bill payment transaction for $900 and link the Journal Entry amount. Make sure to check the correct transactions in the Outstanding transactions and Credits fields. This is a sample data to see how it looks like.

     

     

    You can also reach out to your accountant if you need further assistance with creating the journal entry. If you don't have an accountant, you can choose between the two options for you to get assistance with this:

     

    If you have any more questions or concerns, please don't hesitate to tag my name in the comment section. Enjoy the rest of your day!

    3 replies

    MarsStephanieL
    MarsStephanieLAnswer
    December 3, 2020

    Hi there, @bcreative.

     

    I'd be glad to help you deduct the invoice payment amount from your bill payment from the same person through a Journal Entry.

     

    First, create a Journal Entry transaction, Credit the $100 to the Accounts Receivable account on the first line, and on the second line Debit it from the Accounts Payable account. Then, create a Receive payment transaction to apply the amount from the Journal entry to the invoice. Once done, you can create a Bill payment transaction for $900 and link the Journal Entry amount. Make sure to check the correct transactions in the Outstanding transactions and Credits fields. This is a sample data to see how it looks like.

     

     

    You can also reach out to your accountant if you need further assistance with creating the journal entry. If you don't have an accountant, you can choose between the two options for you to get assistance with this:

     

    If you have any more questions or concerns, please don't hesitate to tag my name in the comment section. Enjoy the rest of your day!

      B
      bcreativeAuthor
      December 5, 2020

      Thank you!

        K
        Kim Perico
        February 4, 2022

        Hello, I have the same question but for QB Premier 2020.  Would the steps be the same?  Thanks for any input!

        MichelleBh
        MichelleBh
        February 4, 2022

        We have different steps in QuickBooks Desktop, @kim11_2. Happy to outline the detailed steps for you. 

         

        I'm pleased to guide you on how to pay your vendor in QuickBooks Desktop. 

         

        In QuickBooks Desktop, we'll need to create a clearing account first. This way, we can move the Accounts Payable (A/P) to Accounts Receivable (A/R). Follow the steps below: 

         

        1. Go to the Lists menu and choose Chart of Accounts.
        2. Right-click anywhere in the Chart of Accounts, then select New.
        3. Select the Bank radio button and click Continue. 
        4. Enter Clearing Account in the Name field. 
        5. Click Save & Close. Please do not enter am opening balance. 

         

        After that, let's create two entries to move the funds accordingly. Do the following: 

         

        1. Go to the Company menu and select Make General Journal Entries.
        2. Add the AR or AP from which you are moving money.
        3. In the second column, add the clearing account you've created
        4. Complete the necessary details, then click Save & Close. 
        5. Create another Journal Entry.
        6. Pick the clearing account in the first line. 
        7. Add the AR or AP account to which you move money.

         

        Once done, in either Pay Bills or Receive Payments, link the Journal Entries together. Do the following: 

         

        1. Go to the Customer menu and select Receive payment.
        2. Choose the customer name in the drop-down. 
        3. Check the transactions and click Apply credits. 
        4. Select the Journal Entry you created in the list.
        5. Click Save & Close. 

         

        For more details, see this link: Set up a clearing account. 

         

        Further, check out these articles below on how to handle vendors/customer credits, AP, AR, and other related matters: 

         

         

        Swing by here again if you have other questions or concerns about vendor transactions. I'm always here at your back. Take care, Kim.

          K
          Kim Perico
          February 4, 2022

          @MichelleBh - Thank you for getting back to me!  I do have a couple follow up questions.

          I did the 2 JE's as indicated.  Then I went into AR and applied the credit to the 6 invoices.  When I look at the customer account, now I see the JE I entered as a credit for 1,541,393.29 with an open balance of -486,256.91.  I also see a payment on the customer account for 1,541,393.29.  I have confirmed that the invoices are now 0.  I also confirmed that the amount of the invoices matches the JE of 1,541,393.29.  Why is there an open balance?

           

          I'm going to try to clear the AP transactions next week as there are 85 line items.  

          M
          MAnneJ
          August 8, 2024

          One potential cause you've received the error message is recording transactions that use two A/R or A/P accounts, @Desie24.

           

          The message will pop up once you try saving the said transaction.  To prevent the error, we can write off a receivable against a payable. That said, you'll have to set up a Clearing Account. 

           

          To set up a clearing account

           

          1. Select Chart of Accounts from the Lists menu.
          2. Click New.
          3. Choose the Bank button in the Add New Account window, then Continue.

           

          You can continue to step number 4 for a detailed guide to setting up a clearing account and how to use it.

           

          Additionally, you might want to consider checking these articles and to learn more about the journal entries: 

           

          We are pleased to assist you if you require additional assistance managing your journal entries in QuickBooks Online. Have a great day ahead!

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