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Provision on Accounts Receivable and Payable how to enter in Quickbooks

Hello All... 

 

I am new to this form but I previously was lurking around.  I am currently having a issue with how to record some invoice/payments on Quickbooks. 

 

We are a wholesaler and we have a customer (distributor) that pays us within 30 days (NET30).  Lately there has been Provision for receivables (a temporary credit memo) as they have forecasted different associated fees that are due to them from us.  This usually gets cleared within a few days after invoices are due, and then we would see a Provision for receivables reversal.  

 

Previously we would create a invoice for this provision receivable and then offset with a credit memo.  But upon thinking about it, if we create a invoice, it would be considered as income, which it shouldn't be as it is just a temporary credit that gets cleared after.  

 

The other issue is that this customer lumps payment together which may include multiple invoices, so they would deduct these provisions and credit these provisions to specific invoices we have open.  It can get very confusing, and right now we are a bit confused as to how to treat these cases without improperly recording such information.

 

Any help and insight would be greatly appreciated, further detail can be provided as well.

 

Thank you,

Tony

 

2 Comments
Established Community Backer ***

Re: Provision on Accounts Receivable and Payable how to enter in Quickbooks

You should issue an invoice for the sale to the distributor

 

Income is reported in accrual basis reports as the date of the sale (invoice is saved) and that is correct accounting

 

Income is reported in cash basis reporting as of the date the payment is entered, not when the invoice is created/saved

 

You receive payment and check off the invoices the lump sum payment applies to

 

Established Community Backer ***

Re: Provision on Accounts Receivable and Payable how to enter in Quickbooks

You describe Barter, not "provision" as credit memo.

The Customer also is your Vendor, because you Owe them. You would Pay them, but there is a holdback = Barter.

Make a Bank account and name it Barter. Pretend to Pay the holdback using Write Check from Barter Bank, for the vendor name as payee for what you "paid them" by Holdback. For that Same Date, you Receive Payment from the Customer Name for that same amount and "Deposit" to Barter Bank. It ends at 0 for this one date, if you did it right.