How to account for annual disbursements invoiced in advance

Welcome to the Community, Oonie.

To properly identify how you should be accounting for annual disbursements payable transactions, I'd recommend working with an accounting professional. If you're in need of one, there's an awesome tool on our website called Find a ProAdvisor. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.

Here's how it works:

1. Go to our Find a ProAdvisor page.
2. Use the City or ZIP search field to specify a location.
3. Select Find a ProAdvisor.
4. Browse through your results and find one that works best for the business. You can click on each ProAdvisor's profile to learn more information about them.
   
   

Once you've found an accountant, they can be contacted through their Send a message form:
 

1. Use the available text box to introduce yourself. Be sure to include details about which services you're looking for.
2. Enter your appropriate info in the Your name, Your email, and Your phone number (optional) fields.
3. Select Send message.

There's also another great service available through our website called QuickBooks Live Expert Assist. Each live expert can provide guidance and help you with the best practices for managing your books.

If there's any additional questions, I'm just a post away. Have a great Monday!

@Oonie 

"I really don't want to have to create over 1000 vendor bills to add to the customer invoices."

How does the payment to your supplier work?  Do you receive a bill from your supplier for the renewals or do you just pay the supplier when the customer renews on a monthly/annual basis without receiving a bill?  There are a few options but IMO it depends on how the supplier bills/doesn't bill you.    

@Rainflurry 

Thanks for your input.  We do not receive any bills from the supplier. As you correctly identified, once the customer pays us we pay the supplier.

@Rainflurry 

Thanks for your input so far.  The supplier does not issue any invoice.  As you correctly identified, once (if) the customer pays us, we will then pay the supplier.

Hi @Rainflurry 

The vendor does not supply any invoice.  As you correctly identify, if and when the customer pays us we pay the vendor.

Thanks for your input so far.  Much appreciated.

Sorry if you already received this, I posted my response but I can't see it in my replies in my profile so sent it again.

@Oonie 

Got it.  A couple other questions:

1) Do you need to give the supplier a list of client's names with your remittance so they can reconcile your payment on their end?  

2) Do you remit payment to the supplier on a set schedule (i.e. weekly or monthly)?

I'm asking so many questions to figure out the best process for your scenario because there is no default setting/way of handling this type of transaction in QBO.  It's like the exact opposite of billable expenses - .  instead of billing the customer for an incurred expense, you're paying the vendor when income is received.   

@Rainflurry 

1.  We do not need to provide the list of names when paying the vendor as we log on to their system to inform them of which customer has paid, so it doesn't need to be duplicated in quickbooks.

2. No set schedule for remittance.

Thanks,

@Rainflurry  but I do need to add the amount payable to the vendor on the invoice to the customer.

@Oonie 

“I do need to add the amount payable to the vendor on the invoice to the customer.”

If you know some/all of this already, forgive me. The bill (and associated expense/payable) is a separate and distinct transaction from an accounting perspective. There’s no way to connect the payable to the invoice in the sense that the invoice (created or paid) will trigger the payable. You can create 1,000 bills and mark them as billable, so you don’t forget to invoice your client for the amount on the bill, but it doesn’t sound like that’s the issue. It sounds like you’re trying to avoid creating 1,000 bills.

IMO, the best way to handle this situation is to create a service product called ‘Registered Office’ or something similar. Check the boxes that indicate you sell and buy the product. Assign the appropriate income and expense accounts and add your vendor. Then, add that item to your client invoices. To determine how much you owe your vendor, run a ‘Sales by Product/Service Detail’ report and select Cash as the accounting method. That will show you which clients have paid for the registered office and from that report you can create a bill in QB for the amount you owe the vendor. You will just need to keep track of the dates you pay the vendor to avoid duplicating payments the next time you run the report. The only potential issue with this method is if you’re on accrual basis and you have invoiced your clients, and the invoices are open at year-end. That would record income without the offsetting expense to the vendor. However, that’s easily adjusted for.

@Rainflurry Thank you so much for your input, I will definitely try this.