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Community Contributor *

Customer as payee

I have a customer for which I receive commissions for in my business. This customer of mine put on a golf tournament last summer for which I was a sponsor. I'm categorizing this transaction as an expense to my 'Advertising & Promotion' account but for the payee should I use my customer that I receive commissions from when they purchase me? Or should I create them as a vendor and add the customer under the 'customer:job' field for tracking the expense? 

 

Does it really matter? Is one way better than the other?

 

Thanks,

Solved
Best answer 02-14-2019

Accepted Solutions
Established Community Backer ***

Re: Customer as payee

You need to Honor that you have two different relationships with this party. You didn't Refund the Customer when you Paid a vendor or supplier of goods or services for a Business Expense.

 

"so I can review and see all expenses I have related to a particular client."

 

This is what you told us: "This customer of mine put on a golf tournament last summer for which I was a sponsor."

 

Advertising is not Related to that Customer. It's Yours. You pay for Signage, Radio spots, SEO on the Web, and you Sponsored something. You paid these Providers. That is another Provider.

 

This is Customer-related advertising: You are my client. You decide to attend the same conference I will attend, and we want to be Product Presenters. I pay for both of us and Charge You back your share. That makes it my expense and my revenue. You are my Customer and this is part of Sales.

 

"and I'd like to track this expense to see the amount of money I put into this client versus what I'm getting back in sales."

 

But that isn't a Direct cost of Sales. It is part of the cost of being in business. You know their "other activity." It is not unusual to have the same party be both a vendor and a customer; but you need to Honor that these are separate activities.

 

"I do this a lot with lunches---If I go out with the client, I'll enter them in the customer:job field so I can see again what I'm spending on one client versus what I'm receiving. Is this something you would advise against?"

 

Well, yes and no. Yes, if you want to Track indirect Costs that didn't relate to an actual Sale; at the least, it is Not Billable and No, it isn't supposed to affect your Job Profitability reporting = not tracking something like this. And, No, because are you following the Rules? The Dec 2017 TCJA changed Meals regulations.

 

You seem to be mixing up the cost of being In business with the cost of Doing your business. You would not try to allocate Rent or telephone per client, either.

10 Comments
QuickBooks Team

Re: Customer as payee

Hello there, @bib_21.

 

I'd like this opportunity to share with you information on how QuickBooks Desktop handles billable expenses.

 

First, a vendor is some who you purchase something from which you need to pay. You received an invoice coming from them which you record as a bill in the system. Transactions recorded under your vendor's name are called Accounts Payables. While a vendor is someone who you sell a product to and needs to pay, Transactions related to your customers are recorded under Accounts Receivables.
 

If you want to track your expenses incurred during the golf tournament as billable and send it to your customer, you can certainly do so. Let's just make sure to turn this feature on your end.

 

Here's how:

 

  1. Go to the Edit menu.
  2. Click Preferences.
  3. Under Time and Expenses, go to Company Preferences.
  4. Put a check mark tot he following:
    • Create invoice from a list of time and expenses.
    • Track reimbursed expenses as income.
    • Mark all expenses as billable.
  5. Click Ok.

Once completed, make sure to mark the Billable Column when creating a bill or writing a check

 

 

If you’re having difficulty with the steps above, I’d recommend contacting our Customer Care Team. A specialist will be able to further assist you via secured remote access session.

 

Here’s how to contact us:

  1. Visit: https://help.quickbooks.intuit.com/en_US/contact.
  2. Choose your QuickBooks Product.
  3. Select your QuickBooks Version.
  4. On the Contact Us page, click a topic.
  5. Click on the Get Phone Number button to see the support number.

Stay in touch with me and let me know how it works on your end. I'm always here to help you record your customer and vendors list and track billable expenses in QuickBooks Desktop.

Established Community Backer ***

Re: Customer as payee

Yes, it matters; set up a Vendor Name for them. It would especially matter if they are subject to 1099-Misc reporting, so ask for a W-9.

 

No, you don't Job Track this. It isn't related to any Customer activity. It's Overhead, for operations. Not for Selling to that customer.

Community Contributor *

Re: Customer as payee

Thank you for your in depth explanation---very informative. Thanks

Community Contributor *

Re: Customer as payee

So you're saying even if I'm purchasing something from one of my clients I've done business with, I should never use them as the payee and instead create them as a vendor? Any other reasons for doing it this way?

 

As for job tracking, I originally started doing this so I can review and see all expenses I have related to a particular client. I've had numerous sales with this client and I'd like to track this expense to see the amount of money I put into this client versus what I'm getting back in sales.

 

I do this a lot with lunches---If I go out with the client, I'll enter them in the customer:job field so I can see again what I'm spending on one client versus what I'm receiving. Is this something you would advise against?

 

I appreciate you replying and apologize for the delay in me responding---I did enjoy your comments.

 

Thanks,

Established Community Backer ***

Re: Customer as payee

You need to Honor that you have two different relationships with this party. You didn't Refund the Customer when you Paid a vendor or supplier of goods or services for a Business Expense.

 

"so I can review and see all expenses I have related to a particular client."

 

This is what you told us: "This customer of mine put on a golf tournament last summer for which I was a sponsor."

 

Advertising is not Related to that Customer. It's Yours. You pay for Signage, Radio spots, SEO on the Web, and you Sponsored something. You paid these Providers. That is another Provider.

 

This is Customer-related advertising: You are my client. You decide to attend the same conference I will attend, and we want to be Product Presenters. I pay for both of us and Charge You back your share. That makes it my expense and my revenue. You are my Customer and this is part of Sales.

 

"and I'd like to track this expense to see the amount of money I put into this client versus what I'm getting back in sales."

 

But that isn't a Direct cost of Sales. It is part of the cost of being in business. You know their "other activity." It is not unusual to have the same party be both a vendor and a customer; but you need to Honor that these are separate activities.

 

"I do this a lot with lunches---If I go out with the client, I'll enter them in the customer:job field so I can see again what I'm spending on one client versus what I'm receiving. Is this something you would advise against?"

 

Well, yes and no. Yes, if you want to Track indirect Costs that didn't relate to an actual Sale; at the least, it is Not Billable and No, it isn't supposed to affect your Job Profitability reporting = not tracking something like this. And, No, because are you following the Rules? The Dec 2017 TCJA changed Meals regulations.

 

You seem to be mixing up the cost of being In business with the cost of Doing your business. You would not try to allocate Rent or telephone per client, either.

QuickBooks Team

Re: Customer as payee

Hello there, @bib_21.

 

I appreciate you coming back to us for additional support. Allow me to join this thread and share some more insights.

 

As mentioned by qbteachmt, you should enter them as a vendor to correct the Accounts Payable workflow. In case you've entered their transactions using the customer name, you'll have to delete them and re-enter it as a vendor.

 

Let me know if there's anything else I can do to help you further. Just add a comment below or mention my name. Have a good one.

Community Contributor *

Re: Customer as payee

I appreciate both of you sharing---I'm not sure but you both seem very firm on your stance on this so I'll make the necessary changes. Is there a way for me to quickly find past transactions that I would have used the customer as the payee instead of creating a vendor?

Community Contributor *

Re: Customer as payee

Thank you for the well worded and thought out response---I appreciate it!

I can see what you're saying with not using my customers as the payee when I'm paying for something---I'll create a vendor for these transactions. Is there a  quick & easy way for me to find previous transactions that I may have used the customer as the payee?

 

On this golf sponsorship for my client, I create them as a vendor. If I would still want to keep them listed as a 'customer:job' so I can see what I'm receiving versus spending, is there some rule that I'm actually breaking or you just wouldn't recommend it? I definitely respect your opinion and am trying to learn here which is the reason for my questioning.

 

 

 

 

 

 

QuickBooks Team

Re: Customer as payee

Hello there, bib_21.

 

Thank you for getting back here in the Community. I'm here to help find previous transactions for a specific customer in QuickBooks Desktop.

 

You can run the Transactions List by Customer report to show all transactions you need.

 

Here's how:

 

  1. Click the Reports tab at the top menu bar.
  2. Select Customers & Receivables.
  3. Click Transaction List by Customer.
  4. Choose a date range.

 

For your second question, tracking of transactions for a job will reflect on specific accounts under the Chart of Accounts. I recommend seeking an expert's advice to ensure your books are on the right track.

 

The Community has your back, so feel free to let me know if you have any additional questions.

Established Community Backer ***

Re: Customer as payee

You are required to do this part: " If I would still want to keep them listed as a 'customer:job' so I can see what I'm receiving"

 

Because this is Sales. Remember this statement: Honor That the Two Relationships exist and always keep the activity separate per the name that applies to that activity.

 

"is there some rule that I'm actually breaking or you just wouldn't recommend it?"

 

You cannot use QB tools to Sell to a Vendor. That makes them a Customer.

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