Pass through payment

[Jonboy1210]

I run a franchise business, the issue I have is we collect money payments from our customers in either cash or card payments towards the customers outstanding finance loan.

This payment is then passed on by me to the financer so how is the best way to set this up in QuickBooks as it’s only a pass through my bank payment 

[patp3005]

Hi Jonboy1210 (any Walton's connection there?),

I have a few suggestions on how you could handle this in QB. A few questions first though. Do you keep up with interest vs principal in the payments or just pass them through? Would it be practical to set up an 'invoice' for each person you're receiving payments from? You could make the invoice for the full amount that they owe. Then as you receive payments you can apply them to that invoice as partial payments. Map the payments to go into a holding account in the Liabilities section, maybe Loan Payment Holding. How often do you pass those payments on? Maybe develop a report that you run on that schedule to show you what payments you've received. When you cut the check to transfer those payments out, make the account the Loan Payment Holding account which will zero out the payments you put in there.

This is just my 'off the cuff' idea of handling it. There may be better ways. If you see any reasons that this won't work let me know. I'd be happy to help you figure it out.

Good luck!

[TaliaI · Accepted solution]

Hello Jonboy1210,

Welcome to the Community - thank you for your question!

We would agree with patp3005's answer. It would probably make most sense to create an invoice for the full amount they owe and make partial payments towards this over time. Using a liability account would also be best, as this will allow you to track how much they are still yet to pay.

Thanks,

Talia

[Jonboy1210]

This would be very hard to do an invoice for each person basically I have a separate program for managing the franchise collection side of the business. And this just creates a one off charge I collect and pass through to the franchise company.

So I think best thing is just to show money as being held as a liability then I pass on

[JanyRoseB]

Thanks for sharing your insights here in the QuickBooks Community, Jonboy1210.

If you don't wish to have a one time off charge, you can use the recurring invoice feature. It will create invoices on a monthly basis, then post payments to those invoices. This can also generate a statement that shows the total payment/invoice of the franchise. 

To learn more about the recurring invoice, you can check this article: How to create a recurring invoice and manage recurring transactions. 

Also, when using a liability account, you'll need to consult with an accountant since it needs to create a Journal Entry so you can post a payment. However, you can't provide a statement with a customer that will show the total payment they made (only report). 

Please know that you're always welcome to post if you have additional questions. I'll be around to help. Have a good one.