How to apply customer invoice to their liability

Welcome to the Community space, @Solar Bozo.

You can create a new account called Other Currents Asset in the Chart of Accounts. This way, you can track the loan and its repayment without exchanging it by check. Let me guide you how:

1. Go to the Lists menu and click Chart of Accounts.
2. Click Account at the bottom of the list and then click New.
3. Under Other Account Types choose Other Current Asset and then click Continue.
4. If you are using account numbers, enter the number in the Numbers field.
5. In the Account Name field, enter Employee Advances.
6. Click Save & Close.

Once done, create a journal entry to apply the credit to the open invoice. Here's how:

1. Go to the Company menu and select Make General Journal Entries.
2. Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
3. Click Save or Save & Close.

For more details, see this article: Create a journal entry in QuickBooks Desktop for Windows or Mac

Upon sharing this suggestion, I'd recommend consulting your accountant first. This is to make sure that your books are accurate. 

To learn more about how Chart of accounts works in QBDT, you may find this article interesting: Understand the chart of accounts in QuickBooks. 

If you have additional questions, feel free to leave a message in the comment section. I'll be happier to help. Take care and have a great day!

Thanks so much for the reply. I wish it made more sense to me. The first thing that didn't make sense is this is a loan to us, not from us. So it is a liability and not an an "Other Current Assets."

Will this mark the invoice as paid as well?

Let me show you how to mark the invoice as paid, Alfisankipan.

Recording journal entries in QuickBooks doesn't automatically mark the invoice as paid. You'll have to ensure to apply it to your invoice. To do so, follow the steps outlined below:

1. Go to the Customer menu, then select Receive Payments.
2. Choose the customer, then choose the invoice. 
3. Click Apply Credits.
4. Under the Available Credits section, tick the box to select the Journal Entry.
5. Click Done. 
   
   
   
   
   
    

Furthermore, after an invoice is paid, learn how to add and match bank feed transactions in different modes. I've added this article for more details: Add and Match Bank Feeds Transaction in QuickBooks Desktop.

You can always contact us with any questions about journal entries or invoices. We're here to make sure everything is taken care of.