Hi there, @MH Admin. When it comes to supplier advanced payments, the method you use depends on whether you're reporting VAT on a Standard/Accrual basis or a Cash basis. Let me outline both approaches, so you can follow the one that works for your accounting method, ensuring the payment is correctly matched and recorded in your books.
You’re on the right track by recording the payment as a cheque if you’re on an accrual basis, since VAT is reported upon receipt of the bill. Now, let’s proceed to entering the bill once it’s received.
- Navigate to + Create, then Bill.
- Enter the necessary details, including VAT.
- Hit Save and close.
Next, let’s apply the payments to the bill:
- Open the bill and select Make payment.
- In the Outstanding Transactions, check the box for the bill that you want to associate with the payment.
- Under the Credit section, select the relevant payment(s).
- If there's a remaining balance, QuickBooks will create a Bill Payment Check. You can adjust the amount if you don’t want to pay the remaining balance.
- Click Save and close.
With Cash Basis VAT Reporting, VAT is reported when the payment is made. In this case, we'll create an Other current assets account to track it. Then, enter the supplier payments in this account, record the bill when received, and pay the remaining bill balance. For further details, check out this article: Record supplier prepayments for products or services in QuickBooks.
I also recommend consulting your accounting professional if you're unsure about this process, as they could have a preferred method for recording these transactions.
If you have further questions, add a comment below. We're always here to help.
