Supplier payments by third party

julie39 · ‎February 16, 2022

Hi

We have used a loan company to pay some of our suppliers. They have paid each supplier directly, so there is no record of payments going out of a bank account. How do I record the invoice and then the actual payment made to the supplier from the third party.

Any help gratefully recieved.

Thank you.

Mark_R · ‎February 16, 2022

I've got your back on recording supplier payments from a third-party company, @julie39.

Firstly, you'll need to create a bill for the supplier transaction. Here's how:

Sign in to your QuickBooks Online (QBO) account.
Click the + New button, then select Bills.
Enter the necessary information.
Click Save and close.

Then, you'll need to set up a clearing account to record the payment. This will be used to move money from one bank to another since the payment was processed from a loan company. Here's how:

Click Accounting from the left menu, then select Chart of Accounts.
Select the New button.
Choose Bank from the Account Type drop-down. Then, select the Detail Type.
Enter Clearing Account in the Name field.
Click Save and Close.

Once done, add the third-party company as a vendor and write a check to record the transaction they made. Please follow the steps below:

Click the + New button and select Check.
Type in the name of the loan company in the Payee field, then press Enter and click Save.
Choose the clearing account under Category.
Enter the Amount.
Click Save and close.

Lastly, you can now pay the supplier bill using the clearing account. Let me guide you how.

Click the + New button, then select Pay Bills.
Choose the clearing account for the Payment Account.
Select the bill.
Click Save and close.

I'm adding this article to learn why you need to use clearing accounts: Why use clearing accounts in your accounting system for PayPal, credit cards, and other payment chan...

You might also want to review all your vendor transactions in the future. You can go to the Expenses menu and select Vendors. Then, go to the Transactions List tab.

It’s nice to work with you, @julie39. Don't hesitate to click the Reply button below if you need further assistance recording supplier payments. I'm always around if you need any help.

View solution in original post

Mark_R · ‎February 16, 2022

I've got your back on recording supplier payments from a third-party company, @julie39.

Firstly, you'll need to create a bill for the supplier transaction. Here's how:

Sign in to your QuickBooks Online (QBO) account.
Click the + New button, then select Bills.
Enter the necessary information.
Click Save and close.

Then, you'll need to set up a clearing account to record the payment. This will be used to move money from one bank to another since the payment was processed from a loan company. Here's how:

Click Accounting from the left menu, then select Chart of Accounts.
Select the New button.
Choose Bank from the Account Type drop-down. Then, select the Detail Type.
Enter Clearing Account in the Name field.
Click Save and Close.

Once done, add the third-party company as a vendor and write a check to record the transaction they made. Please follow the steps below:

Click the + New button and select Check.
Type in the name of the loan company in the Payee field, then press Enter and click Save.
Choose the clearing account under Category.
Enter the Amount.
Click Save and close.

Lastly, you can now pay the supplier bill using the clearing account. Let me guide you how.

Click the + New button, then select Pay Bills.
Choose the clearing account for the Payment Account.
Select the bill.
Click Save and close.

I'm adding this article to learn why you need to use clearing accounts: Why use clearing accounts in your accounting system for PayPal, credit cards, and other payment chan...

You might also want to review all your vendor transactions in the future. You can go to the Expenses menu and select Vendors. Then, go to the Transactions List tab.

It’s nice to work with you, @julie39. Don't hesitate to click the Reply button below if you need further assistance recording supplier payments. I'm always around if you need any help.

julie39 · ‎February 16, 2022

Thank you so much. That is such a great help.

Greatly appreciated. :)

kingpin1959 · ‎September 11, 2024

Hello. I am following your step by step directions for setting up payments by third party.

I have the Clearing Account made and the Vendor is my list.

However, I am unsure when it comes to writing the cheque. What "bank account" do I use to write the cheque to the third party and do I have to offset the amount with an expense account?

jenop2 · ‎September 11, 2024

You can use the clearing account in the Bank account field when recording the cheque, kingpin1959. I'd be glad to add more details and clarify the steps for recording third-party payments in QuickBooks Online.

Using the dummy or clearing bank account will make sure that your actual bank is not affected since no actual payment was made. You normally use it as suspense accounts to temporarily hold transactions that don't have a clear assignment or categorization. It's also used as a temporary holding place when transferring funds between different bank accounts in QBO.

You can read more details about this here: Set Up A Clearing Account.

However, I'd recommend reaching out to your accountant to check if you need to offset the amount with an expense account.

Allow me to provide you with these helpful references in case you need them when working with your suppliers in QuickBooks Online:

Please feel free to reach out to us if you require any additional assistance when recording transactions and paying suppliers in QuickBooks Online. We are available at all times to provide the support you need.

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