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travelqueen
Level 3

How to categorize a client payment received that was to pay a vendor?

My client paid me directly for a payment that went to the vendor.  Once the payment entered my account, I sent the payment to the vendor with my credit card (I know this was not wise).

 

How should I categorize the payment from the client?

How should I categorize the payment to the vendor on behalf of the client?

Solved
Best answer September 13, 2020

Best Answers
JessT
Moderator

How to categorize a client payment received that was to pay a vendor?

It's great to hear that you're happy you joined the QuickBooks Community, travelqueen! We feel the same!

 

You'll only need to make the vendor payment (credit card payment) as a billable expense. This step will then create a billable expense charge transaction for your customer that you can turn into an invoice. Then, that invoice will be a matching entry to the downloaded payment in your checking account. Or, you can choose a longer method. Pay the invoice first, deposit the payment to your checking account, and match it with the downloaded payment.

 

I got a sample below where I got a downloaded transaction for the supplies I paid using my MasterCard. Then, I made it billable to Customer Andy.

 

Looking at Andy's profile, he now has a billable expense charge that I can turn into an invoice.

 

 

Since Andy paid me in advance and it's deposited to my checking account, I can just pay the invoice and deposit the payment to my checking account as well.

 

See more info about categorizing and matching downloaded transactions.

 

Feel free to reach out if you have more questions. Enjoy the rest of the weekend!

View solution in original post

JamesDuanT
Moderator

How to categorize a client payment received that was to pay a vendor?

The screenshots and the YouTube link are very helpful, travelqueen.

 

Now, I know what is happening. The Billable function only works for expense transactions. You're likely clicking on a deposit in the Banking (For review) page. The amounts under the RECEIVED column are the bank deposits.

 

Try clicking an expense transaction and you'll see the Billable box next to the Customer/project field.

 

Useful links regarding the billable feature were already added on the earlier responses. I'll share a link on how you can effectively categorize the transactions: Categorize and match online bank transactions in QuickBooks Online.

 

Let us know if you need anything else so we can further assist you. Have a great day!

View solution in original post

11 Comments 11
AileneA
QuickBooks Team

How to categorize a client payment received that was to pay a vendor?

It's great to have you here in the Community, travelqueen.  

  

We can categorize it as a billable expense. They are the expenses that are incurred by you on behalf of your customer in performing some work for them. You can mark bills, checks, expenses, etc. as billable, and they'll show as an expense on your books. 

 

However, the billable expense feature is only available in Essential, Plus and Advanced version of QBO. To see the features on the different versions of QBO, please check this link: https://quickbooks.intuit.com/online-compare/.  

 

For other related articles you can use in the future, you may also refer to this helpful link: Income and expenses for QuickBooks Online.

 

That's it! Please know that our doors are always open here in the Community. Don't hesitate to add a post if you have any other QuickBooks concerns in the future. Wishing you the best!

travelqueen
Level 3

How to categorize a client payment received that was to pay a vendor?

Thank you @AileneA for responding.  I'm very happy I decided to join the community.  I've been working on my books nonstop from yesterday, and it's great to get some support.  

 

I will definitely read up on Billable Expenses more.  

 

Just to be clear, I'd categorize the Client Payment (Deposit) to Checking Account as Billable Expense AND the payment I had to the vendor as Billable Expense as well?

JessT
Moderator

How to categorize a client payment received that was to pay a vendor?

It's great to hear that you're happy you joined the QuickBooks Community, travelqueen! We feel the same!

 

You'll only need to make the vendor payment (credit card payment) as a billable expense. This step will then create a billable expense charge transaction for your customer that you can turn into an invoice. Then, that invoice will be a matching entry to the downloaded payment in your checking account. Or, you can choose a longer method. Pay the invoice first, deposit the payment to your checking account, and match it with the downloaded payment.

 

I got a sample below where I got a downloaded transaction for the supplies I paid using my MasterCard. Then, I made it billable to Customer Andy.

 

Looking at Andy's profile, he now has a billable expense charge that I can turn into an invoice.

 

 

Since Andy paid me in advance and it's deposited to my checking account, I can just pay the invoice and deposit the payment to my checking account as well.

 

See more info about categorizing and matching downloaded transactions.

 

Feel free to reach out if you have more questions. Enjoy the rest of the weekend!

travelqueen
Level 3

How to categorize a client payment received that was to pay a vendor?

Hi @JessT

 

Thank you for such a detailed example.  This is exactly the guidance I needed.  😊

 

This will be my first time creating an invoice for a client, so I'm glad to get that experience with this scenario!

 

Thank you both! 

travelqueen
Level 3

How to categorize a client payment received that was to pay a vendor?

Hi @JessT / @AileneA ,

 

I upgraded to QB Plus to get access to the Billable Expense feature.  Is there a wait period before the functionality will become active?  I'm unable to see the checkbox for billable on any of my expenses, invoices, or chart of accounts.

 

Below are screenshots from my current setup.

 

 

Expense details from a connected account.

 

I was hoping to get all 6 of my accounts cleared before the work week, but that doesn't seem possible with all these setbacks.  I'll truly appreciate some assistance.

 

I've signed in on 2 two different browsers and in an incognito window (thinking its a cache issue).

Pabz_L
QuickBooks Team

How to categorize a client payment received that was to pay a vendor?

Hello there, @travelqueen.

 

Let me share some information about Billable Expense in QuickBooks Online.

 

The billable expense feature has no waiting period. You’ll have to turn on this feature in the account and setting so you’ll be able to mark bills, checks, expenses, etc. as billable.

 

Here’s how:

 

  1. In your QuickBooks Online Plus account, click the Settings icon.
  2. Select the Account and Settings and click the Expenses tab.
  3. Under Bills and expenses, tick both Track expenses and items by customer and Make expenses and items billable.
  4. Make sure that the Track billable expenses and items as income has a checkmark.
  5. Then, click Save.

 

You can also use this article on how to use billable expense and add to invoice in QuickBooks Online. Enter billable expense

 

if you need further assistance, don't hesitate to leave a comment below. I am here to help. Keep safe.

travelqueen
Level 3

How to categorize a client payment received that was to pay a vendor?

Hi @Pabz_L ,

 

These are the steps I took.  I noticed my images didn't come over in the copy and paste.  However, I included a screenshot of my settings.

 

I've attached them for your review.Screen Shot 2020-09-13 at 7.08.12 PM.png

 

 

I'm wanting to edit the transaction from a connected bank account, as shown in this YouTube video - https://youtu.be/XmyrhoAGsLc.  However, my screen don't have the same options.

Screen Shot 2020-09-13 at 7.07.48 PM.png

 

JamesDuanT
Moderator

How to categorize a client payment received that was to pay a vendor?

The screenshots and the YouTube link are very helpful, travelqueen.

 

Now, I know what is happening. The Billable function only works for expense transactions. You're likely clicking on a deposit in the Banking (For review) page. The amounts under the RECEIVED column are the bank deposits.

 

Try clicking an expense transaction and you'll see the Billable box next to the Customer/project field.

 

Useful links regarding the billable feature were already added on the earlier responses. I'll share a link on how you can effectively categorize the transactions: Categorize and match online bank transactions in QuickBooks Online.

 

Let us know if you need anything else so we can further assist you. Have a great day!

travelqueen
Level 3

How to categorize a client payment received that was to pay a vendor?

Thank you @JamesDuanT!. That was exactly the issue.  It appeared the YouTube video was in the same section.  Once I go to Categorized, I'm able to see Billable when I click on the entry.

 

Thanks for helping me move forward and for sharing the additional resource links.

IncreasingLashes
Level 1

How to categorize a client payment received that was to pay a vendor?

How do I create a vendor check for a payment I received from my customer as a billable expense without manually entering all the information as a new check?

ChristieAnn
QuickBooks Team

How to categorize a client payment received that was to pay a vendor?

Hi there, IncreasingLashes.

 

When you create a vendor check as a billable expense, you'll need to manually enter all the information as a new check. However, if this is an existing vendor check, you can edit this entry to change the information. This way, you can set this as a billable expense and can assign it to a specific customer. Before that, I'd suggest making sure that the billable expense tracking option is turned on from Account and Settings.

 

Then, please follow the steps below on how you can edit the existing vendor check.

 

  1. Click the Expenses menu at the left panel.
  2. Choose the Expenses section.
  3. Find the check you've created. Then, double click it to expand the page.
  4. Put a checkmark in the Billable option.
  5. Choose a specific customer.
  6. Fill in the other necessary fields. 
  7. Hit Save and close.

 

 

 

 

 

 

Please refer to this article to see information on how pay, cost and billable rates impact profitability: What are pay rates, cost rates, and billable rates?.

 

Let me know if you have other concerns related to QuickBooks, I'm always here to help.

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