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Experienced Member

Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of their bills instead of deducting the amount they owe us in a payment. How do I do this ?

 
9 Comments
Frequent Contributor *

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of their bills instead of deducting the amount they owe us in a payment. How do I do this ?

Hi there!

It sounds like you're trying to do a trade or barter transaction.  Is that correct?  If so, this may help you:

A barter transaction occurs when you and your vendor exchange goods and services. To record the exchange, you would enter an invoice and a bill to record the products or services you are exchanging.

Step 1: Set up the barter bank account

Here's how to set up the barter bank account:

  1. Select the Gear icon on the Toolbar.
  2. Under Your Company, choose Chart of Accounts.
  3. Create a new account:
  • Select New, and select Bank for the Category Type.
  • Select Cash on Hand for the Detail Type of bank account.
  • Enter the account name. (Example: Barter Bank Account)
  • Select Save.

Before you begin to enter the barter transaction, make sure the barter partner's name is in both the vendor list and customer center. Since you can't have exactly the same name in both lists, make one of the names slightly different.

Step 2: Create and receive payment for the invoice for the barter transaction

After that you will need to create and receive payment for the invoice for the barter transaction:

  1. Select the Plus icon (+) on the Toolbar.
  2. Under Customers, select Invoice.
  3. Enter the necessary information.
  4. Receive Payment for the invoice:
    • Select the Plus icon (+) on the Toolbar.
    • Under Customers, choose Receive Payment.
    • Select the barter customer in the Customer drop-down, then fill the date and amount.
    • Select Add New in the Payment Method.
    • Enter Barter in the name field, then select Save.
    • Select Deposit To: and then select the barter bank account created above.
    • Save the transaction.
Step 3: Enter and pay the bill for the barter transaction

Finally, you will enter and pay the bill for the barter transaction.

  1. Select the Plus icon (+) on the Toolbar.
  2. Under Vendors, select Bill.
  3. Fill in required information.
  4. Pay the Bill:
    • Select the Plus icon (+) on the Toolbar.
    • Under Vendors, select Bill.
    • In the Payment Account drop-down, select the barter bank account created above.
    • Put a check for that bill under the Pay column.
    • Enter the amount then Save.

Once the invoice is created and the bill is paid, you will have a record of the exchange but the barter bank account will be zeroed out.

If the exchange of goods was not equal in value, keep in mind that the invoice or bill will show a balance due or credit. In that case, you'd need to either Pay one vendor (if you owe the customer/vendor) or receive payment (if they owe you) to clear the balances owed.

 Note: If your business operates on a cash basis, the invoice payment and the bill payment should both be dated with the same date as the invoice or the bill, whichever came last.

Now you know how to record a barter transaction.

Hope that helps!!

-Stacy

Senior Explorer **

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of their bills instead of deducting the amount they owe us in a payment. How do I do this ?

It's a couple of steps, but there's a pretty straightforward way to do this.

  1. Create a customer account for your vendor so you can cut the invoice in their name
  2. Open the bill with the amount you're filing a claim against
  3. Add a new line on the bill to reflect the claim amount. Include appropriate comment, mark it billable, and specify the new customer account as the customer.
  4. Adjust the other lines on the bill as needed to reflect the claim. You don't want to change the overall amount of the bill.
  5. Save and close the bill.
  6. Open Invoices -> Invoice for Time and Expenses
  7. Locate your vendor's customer account, which should show the amount of the claim.
  8. Select that account, select the expense you're billing, and create the invoice.

Note that when you go to pay the bill, you'll be paying the full amount; and in the meantime you'll be waiting for a check for your claim, which you'll apply to the open invoice when it shows up.

 

Good luck!

 

Experienced Member

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of their bills instead of deducting the amount they owe us in a payment. How do I do this ?

Thank you, I was able to create the invoice.   Now from this I have another question because I have just been told that our vendor will issue a credit against the account if the invoice/claim is accepted.  Now when this happens, how do I resolve the invoice I created?

 

Experienced Member

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of their bills instead of deducting the amount they owe us in a payment. How do I do this ?

Thank you for your help, I was able to create the invoice.  Now I have just found out that our vendor/supplier will issue a credit to our account if they find the invoice/claim to be valid.   If this happens, how am I to resolve the outstanding invoice?  Many thanks in advance!

QuickBooks Team

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of thei...

Thanks for coming back to the Community, @KathyF.


Let’s straightened out the issue by recording a barter transaction.


To track the exchange of items, create a new account first. Here’s how:

 

  1. From the menu bar, select Lists and choose Chart of Accounts.
  2. In the Account drop-down, pick New to create a new bank account and type in Barter in the Name field.
  3. Click Save & Close.

Create a bill to input the transaction by going to the Vendor Center. I have a few steps to do this.

  1. From the Vendor Center, pick Enter Bills and fill in the fields.
  2. After creating the transaction, choose Pay Bills to pay the transaction.
  3. Select the bill for the vendor you will barter with.
  4. In the Pay Bills dialog box, choose the Barter Account as the payment account.
  5. Click on the Pay Selected Bills tab.

To record the barter transaction, you’ll have to receive the payment.

 

  1. Go to the Home page and click the Customers button to open the Customers Center.
  2. From the New Customer & Job drop-down list, choose the correct customer.
  3. Click on the New Transactions drop-down list and select Invoices.
  4. Click on a blank line on the invoice and then select the barter item you created from the drop-down menu.
  5. Input the details about the barter arrangements in the Description field.
  6. Click Save & Close.

With these steps, the open invoice will now be closed.

 

Reach out to me if you need further assistance with any of these steps. I'll jump right back in to help.

 

Experienced Member

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of their bills instead of deducting the amount they owe us in a payment. How do I do this ?

Now I know I did something wrong!  I now have the amount of the bill listed in our checking account as paid.  Any idea how to fix?

Experienced Member

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of thei...

Thank you so much for your help.  I've now made things a real mess!  I followed the steps as valderost gave me but I'm sure I did something wrong.    I entered on a separate line  (the value of our claim) while entering the bill, and deducted the claim amount from the line item we have the claim for, so that the total of the bill would remain the same.  Now,  in our checking account register, the claim amount is entered  as paid, as if I wrote a check for it.  This was done before I received your reply, there was no mention of a barter account in the answer from valderost so I therefore did not open one.  I entered the claim amount on the bill, entered the new "claim" account for the vendor under customer/job, and checked billable.  I was going to delete the "payment" from the check register, but thought maybe I would just remove the claim line from the bill itself and start from scratch, but that did not work and the checking is still showing the claim as paid.  Can you help me?  After I get through this mess, I need to know how to remove the claim invoice to show as closed/resolved after out vendor credits our A/P account for it.  We will not be receiving a check to clear it.    

Experienced Member

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of thei...

I think I figured it out, the item that I entered was tied to the checking account.  Once I changed it to the barter account (I opened after I got your reply) it disappeared from the check register.  Does that sound right?  If it is, then I'm down to the final question, how to remove the invoice with the credit that the vendor will issue to settle the claim so it does not show as cash received?  

QuickBooks Team

Re: Our vendor/supplier wants us to invoice them for the amount of a claim we have on one of thei...

Hello there, KathyF.

 

I appreciate you for taking the time to reach us back and provide additional details of your concern. I'm here to make sure you're in the right track of handling this situation.

 

As I've read through the whole thread, I come up with this resolution. Since you've already created a Bill and an Invoice for your vendor/supplier, we'll just need to apply the payment from each of them.

 

Before we start, let's set up a clearing account or wash account to move funds from one account to another.

 

Here's how:

  1. Go to the Lists menu.
  2. Select Chart of Accounts.
  3. Right click anywhere in the Chart of Accounts, then select New.
  4. In the Add New Account window, select the Bank radio button.
  5. Select Continue.
  6. In the Account Name field, enter Clearing Account.
  7. Do NOT enter an opening balance.
  8. Click Save & Close.

Now that we're done setting up a Clearing Account, let's create a Check for your Bill and apply the Clearing Account. Let me walk you through the steps below:

  1. Go to the Banking menu.
  2. Select Write Checks.
  3. From the Expenses tab, enter an account for Accounts Payable and the Clearing Account on another line.

 

Once done, let's Pay Bills to link your Bill and Check. Below are the steps on how to do it:

 

  1. Go to Vendors.
  2. Click Pay Bills.
  3. Select the Bill and click the Set Credits.
  4. Check the box beside the credit and click Done.

003.PNG

For the Invoice created, we can create a Bank Deposit before Receive Payment

 

To create a Bank Deposit, here's how:

 

  1. Go to the Banking menu at the top.
  2. Choose Bank Deposits.
  3. Select the Clearing Account as the Deposit To account.
  4. In the Received From section, choose the vendor you created as a customer.
  5. Choose Accounts Receivable as the From Account.
  6. Enter the amount.
  7. Click Save & Close.

002.PNG

 

Once done, let's Receive Payment to link the Deposit and Invoice.  Doing all this should zero out the balance of your Clearing Account.

 

That's it. If there's anything I can further assist you with the whole process, please let me know. I'm always here to help you out.