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Community Contributor **

Use a barter account for a customer that is also a vendor

I have a customer that buys product from me all the time.

They pay me once a month by electronic transfer.

 

This customer is also a vendor of mine, bu they buy much more from me than I do from them.

So, when they make the electrionic transfer to me each month they off set the amount I owe them and then electronic tranfer the net amount to me. 

 

I see three possible ways to record this in QB Pro Desktop 2018 for this and I would like some advice on which is the best choice.

 

1-Create a bill from my customer and then pay it by offset againt one of my invoices to my customer.  Is is possible to do this.

 

2-Set up my customer also as a vendor, but I would like some guidance on how to offsit my A/P to them against my A/R from this customer. 

 

3-Create a negative sales invoice (if that is possible) to my customer for the monthly offset amount then mark itr paid.

 

Thank you!

Solved
Best answer 02-17-2018

Accepted Solutions
ProAdvisor

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

How about none of the above?  Create a barter bank account and flow the a/r and a/p thru the account to track this unique situation.  So create the bank acct. called “barter”.  Then pay the bills and receive the invoice payments thru it.  One will wash out the other.  

 

You cannot create a negative sales transaction in qb.

13 Comments
ProAdvisor

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

How about none of the above?  Create a barter bank account and flow the a/r and a/p thru the account to track this unique situation.  So create the bank acct. called “barter”.  Then pay the bills and receive the invoice payments thru it.  One will wash out the other.  

 

You cannot create a negative sales transaction in qb.

Community Contributor **

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

Thank you Lynda!

That is an excellent solution.

 

Community Contributor **

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

Lynda,

I thought I had it, but one more question.

I set up the clearing/barter bank account for that customer, but I cannot seem to figure out how to set receipts for sales from this customer to map to the clearing/bater bank account.

And how to map the offset my customer takes also to the clearing/barter bank account .

Can you please help.

 

Thank you!

ProAdvisor

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

You would deposit the sales receipt to the same barter account.  =money in

You pay your bill out of the same barter account.  =money out.  

 

The 2 transactions should zero each other out.

Community Contributor **

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

Hi lynda,

I understand the work flow, but I cannot seem to get my QB Pro 2018 dekstop to make this happpen.  I will explain.

Perhaps there is a configuration setting I am nmissing somewhere.

 

I have a bank account account that mirros my actyual bank acount

I have an account called undeposited funds

I also have an account call Clearing/barter account

 

It seems that when I create a customer and enter an invoice and receive the payment the cash posts to the undeposited Funds account.

 

Then I mark  the cash as deposited, and it posts to my actual bank account and is removed from the undeposited Funds account.

 

 

For this barter customer/vendor how do make it default to get the funds to be received into it and then then have them deposited into my actual bank account.

In othe words, receive cash for this custoemr only the cash needs to map to the  undeposited Funds account.

 

And, when I deposit this cash it needs to map to theactual bank account.

 

Or, this reciet of cash could bypass the undeposited Funds account. and just map to the actual cash bank account.

I believe onece I get this receipt problem solved that pay th eemxpens will a follow a similar approach

 

Thank you for your time!

 

Highlighted
ProAdvisor

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

Yes, the piece you are missing is that the barter acct. is a bank account type.  You deposit the paid invoice to it and you pay the vendor with it.  These transactions never touch your actual bank acct at all.

Not applicable

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

What if I create a Chart of Account called "Credit Notes" as an offset account and create a Credit Note for the customer and apply it when payments are made. And create a Bill for the goods or services purchased and then create a Supplier Credit. Then pay the supplier using the Supplier Credit.

All of this using the same "Credit Notes" account as an Income Account.

At the end of the day the accounts will offset each other and there will be no need to associate a bank account.

Please correct me if I'm wrong

QuickBooks Team

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

I’m happy to see you in the QuickBooks Community, Umar.


Allow me to share some additional information about offsetting the Accounts Receivable and Accounts Payable.

 

To clear these out, you’ll still have to create a clearing account to transfer funds from one customer or vendor to another. This will help keep your records in tiptop shape.


To create a clearing account:

 

  1. Go to Lists at the top menu bar, then select Chart of Accounts.
  2. Click on the Accounts drop-down, then choose New.
  3. In the Add New Account window, mark the radio button for Bank.
  4. In the Account Name field, enter the appropriate account name. For example, clearing, barter or wash accounts.
  5. Fill in the necessary fields.
    Note: Do not enter an opening balance.
  6. Choose Save & Close.

Once done, you can now use the barter account to input the transactions. For detailed instructions follow the steps in this article and proceed to the To use a clearing account section: Set up a clearing account.

 

To ensure transactions are properly tracked, I suggest contacting your accountant for guidance on which account to use for debits and credits.


This information should help you moving forward.


If you have any questions or concerns while working in QuickBooks, leave me a comment below. I’ll be around to help and make sure you’re taken care. Wishing you the best.

 

Community Explorer **

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

Thanks Rasa, 

 

I've somehow turned into a Quickbooks addict. I'm not sure if many people use QB in Qatar but I sure do love it  

 

I'd like to try out the Barter account method but I'm afraid it may render some reports and insights inaccurate  It's very important for me to keep a track of Service items, customer statement of accounts as well as sales insights like overdue, open and paid invoices in the Sales screen. 

 

I even tried a direct method by creating a JE crediting AR and debitting the expense account since over here, audits are pretty straight forward. 

 

I run a company consisting of transportation, Contracting and vehicle maintenance  We deliver sand and gabbro making tracking Products / Services very important. We only handle the delivery part and our hade the sand sometimes from one client to be used in our construction projects. So the revenues will be added to Transportation and Expenses would be added to construction material. 

 

I hate to make my reply long but my requirement is multi faceted. 

 

Bottom line, will the direct JE method work for me? 

QuickBooks Team

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

Hello again @steve2umar.


I’m happy to know QuickBooks is able to help customers from different parts of the globe manage their business. I want to ensure your transactions are handled completely in your account.


Every business has a different structure, and it also goes the same way with recording data. Based on the information provided, you’ll have to check with your accountant to see if the journal entry will work in your industry setup.


Otherwise, they’ll provide other options to you on how to track transactions in QuickBooks.


To give more insights about handling receivables and payables, check out these articles:

 

 

The information I provided should point you in the right path.

 

If there's anything else I can help you with, click on the Reply button and leave a comment. I'll get back to assist you further.

 

Not applicable

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

you cant adjust same customer and vendor in quick books online.

hope they will upgrade it.

Experienced Member

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

How would the transactions wash out? if ur accounts receivable is 1000 and accounts payable is 200 how does that work flowing through a bank account?

QuickBooks Team

Re: I have a Customer that is also a vendor and we offset AR and AP, QB Pro Desktop 2018

Let me share some information about this wash out account, @lfyuktyifbhjuj

 

You'll use this wash account to move balances from one account to another. To create this, you can follow the steps provided by my colleague, @Rasa-LilaM. From here, you can now use this to record both Accounts Payable and Accounts Receivable of 200.

 

Here's how: 

 

  1. Go to your Vendors menu and choose Pay Bills.
  2. Under Account, select the Wash Account.
  3. Choose the 200 worth Bill, then click on Pay Selected Bills.
  4. Select Done to save this information.

Next, mark the invoice as paid:

  1. On the Customers menu go to Receive Payment.
  2. In the Received From drop-down, select the customer's name.
  3. Provide all the information needed.
  4. Click the Save & Close button once done.

If the $1000 Invoice should be marked as paid, then this 800 will be recorded as bad debt. First, create an expense account to track the bad debt. Then, close out this unpaid invoices.

 

See the following steps:

 

Step 1: Create an expense account to track the bad debt.

  1. Go to the Lists menu and select Chart of Accounts.
  2. Select the Account menu and then New.
  3. Choose Expense, then Continue.
  4. Set Bad debt as the Account Name.
  5. Click on Save and Close.

Step 2: Close out the unpaid invoices.

 

First, create a Bad Debt service Item:

 

  1. Go to your List menu, then Item List.
  2. Select Item then New and choose Service to enter the service name.
  3. Under Account, choose the Bad Debt Expense you just created.
  4. Hit the Save button once you’re done.

Lastly, create a Credit Memo worth $800 and use the Bad Debt Service Item under the Item. Apply this as a payment to the invoice’s remaining balance.

 

  1. From the Customers menu, select Create Credit Memos/Refunds.
  2. Choose the customer from the Customer: Job drop-down.
  3. Set the Bad Debt as the Item. Click on Save & Close once you’re done.
  4. On the Available Credit window that appears, choose Apply to an invoice.
  5. QuickBooks opens the Apply Credit to Invoices window where you can select the invoice to which you’ll apply this credit.
  6. Select OK.

Check the following article for more information: Set up a clearing account.

 

Let me know if you have follow-up questions or anything else by leaving a comment below. I'm always glad to help in any way I can. Have a great rest of the day. 

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