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Established Member

Handle pass-through expenses.

Folks, I am an attorney who passes through expenses directly to the customer.  I do so by using an asset account, called Case Expense Receivables, as the account where these expenses go, noting each entry in that account with the customer's information, and then using the Time/Expenses feature when I create invoices for the customer.  This works well.

 

On occasion, I get a refund from a vendor when I have already paid that vendor and have already invoiced the refunded expense to the customer.  If I happen to be creating an invoice for that customer that is larger than the refund, then I essentially do what I do when passing through an expense except use a negative number.  I create a GL entry that credits the Case Expense Receivables account.  This also works, although I could certainly be convinced that there is a cleaner way.

 

The problem occurs if I am not currently, or am no longer, invoicing that customer.  How do I enter the vendor refund in such a way that I can have that refund sit as a customer credit to apply to a future invoice, or ultimately refund that credit to the customer?  Credit memos do not have the same kind of time/expense feature that invoices have.  Thanks!

2 Comments
Established Community Backer *

Re: Handle pass-through expenses.

What you doing is correct.  I can think of no easier way to handle your situation.  You can easily double click on the account, set the date to all and total by customer to review the balances.

QuickBooks Team

Re: Handle pass-through expenses.

Hello stevebrandli,

 

Thank you for posting here in the Community. I'm here to lend a hand with any concern you may have with recording pass-through expenses in QuickBooks Desktop.

 

Since transferring vendor refund to customer credit is currently unavailable, I suggest using the Journal Entry feature to record the transactions. Before doing so, you can set up a clearing account first through the Chart of Accounts.

 

Here's how:

 

  1. Click the List tab at the top menu bar.
  2. Click Chart of Accounts.
  3. Click the drop-down arrow next to Account at the bottom.
  4. Select New.
  5. Choose Bank.
  6. Click Continue.
  7. Enter a name (example: Clearing account).
  8. Click Save & Close.

Once done, you can proceed with creating the journal entry transactions for your vendor and customer. After entering them, the next thing you can do is create the invoice and apply credits on it.

 

I'm adding some screenshots below for your visual reference:

 

 

 

 

I also highly recommend seeking expert advice from an accountant to ensure your books will be correct.

 

I want to ensure that you're able to succeed with recording these transactions, so please feel free to let me know how it goes. If you should have any questions, I'm just a click away.