How do I account for trade-outs?

Forum|Forum|2 years ago
September 1, 2023
1 reply
1 view

We are a landscaping business and we use a subcontractor for all our mowing. In return we do all fertilization & weed control and irrigation work for his customers. I'm having trouble accounting for this. Let me give you an example.

Let's say in July we did $10,000 for our sub and our sub did $30,000. That would mean we owe our sub $20,000. How do I account for this?

NOTES: We have a CRM software so do all billing in that and then i do journal entries to account for monthly sales. I need to figure out how to do a journal entry for our subs work and keep a running total of what we owe him/he owes us. The actual work he does is already accounted for in the monthly sales journal entry.

QuickBooks Desktop

Rainflurry

Level 11

@Lindsay_B

If you can post an example of your journal entry (remove any sensitive info), I can help with that.

However, IMO, it's going to be much better to use a monthly invoice and a monthly bill. In your example, enter a quick invoice to your sub for $10K and enter a bill from your sub for $30K. Then, use a bank Clearing Account to offset these two. Set up a bank account called Clearing Account if you don't have one. Receive Payment on the invoice for $10K and deposit it to the bank Clearing Account. Then, pay down the bill $10K using the bank Clearing Account. The Clearing Account is now $0 and your sub's bill is showing a balance due of $20K. Pay it and you're all set. This method keeps your sub's invoices, sub's bills, and their respective balances recorded clearly in their accounts.

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