I have an existing balance with a vendor. We have decided to make payments to them with our credit card so that we can also benefit from reward points. We also have our credit card listed as a vendor in our system. What is the correct way to first apply the charge on our credit card bill in QB and then make sure the vendor's balance is paid down at the same time so that it reflects the correct balance we owe? Right now, the way I am doing it is skewing our P&L reports.
Example: Say we owe ABC Company $10,850.00. This balance is made up of several invoices that have been entered in to match our itemized invoices. If we are paying $500 a month until that balance is paid off, how do I show the $500 charge that is paying for products without it messing up our P&L for that month? Product purchased shouldn't affect the P&L Directly bc the profit margin is already factored in during sales and COGs. Its essentially double dipping when I apply the $500 payment towards a service which is what im currently doing because i dont know how else to show it. Thank you. Let me know if anything i said is confusing and I will try to clear it up. It's hard to explain.
I'll work with you, @Rachel_I.
A credit card as a mode of payment is entered as one of your accounts, not a vendor. This way, it'll show up the accuracy of your report when used to pay expenses.
These are the article to use and learn more about paying vendor invoices using your credit card:
I suggest contacting your accountant for guidance in tracking credit card and vendor payments along with working on your reports. Use the link to find someone you want to work with: The QuickBooks Certified ProAdvisor.
I'm adding these articles with the topics you can use while recording the common vendor transactions: The Vendor Transaction Workflows in QuickBooks Desktop.
It'll always be my pleasure to help if you've got additional questions about vendor balances. Use the Reply option below and surely I'll be here ready to assist you. Take care and stay safe!
This was very helpful. One last issue after I've now created an actual credit card account for my credit card. I now have a balance still owed in the vendor credit card account which shouldn't exist anymore now that it has been reflected in the credit card account. Is there a way to essentially void that balance without it affecting our P&L's so that there's not a double balance showing in our credit card owed and in accounts payable? Thank you!
I have steps to write off your vendor balances in QuickBooks, @rachel. And I'm happy to outline the detailed steps.
I'll make sure your vendor balance will offset in your QuickBooks Desktop.
Please consult your accountant before attempting the option listed below. This way, we can ensure that your credit card information is accurate at any time. Also, this option will impact your Profit and Loss as we're trying to create a journal entry to write off the vendor's balance.
After that, apply the journal entry you create to the existing debit/credit. To do this, follow the steps below:
In addition, if the balance is small amounts only, you can use the discounts feature to write off the balance. For the complete steps, check out this article: Write off customer and vendor balances.
Furthermore, don't forget to reconcile your account to make sure they match your credit card statements.
Lastly, check out these articles below on how to handle vendor transactions, inventory, credit card charges, and other related matters:
I always check my notification to ensure all responses are well taken care of. So feel free to ask any questions you may have about your account. I'm happy to answer them all. Take care, Rachel.
I cannot make it through the first step because I get an error saying, "Transactions to accounts payable must include a vendor". For the offset account, I type in the name of our credit card account but it won't show our vendor, only the credit card account as a credit card account. Thanks.
I've got some tips to share with you to ensure you apply credit card payments with ease, @Rachel_I.
Every time you use an Accounts Payable account for bank deposits or journal entries you'll need to make sure to associate it with a vendor. Based on the error message that you got, the Name drop-down has not been filled.
Let me show you how to get rid of that error:
In case the vendor's not added yet, click on the <Add new>. Then follow these to continue:
That should do it! If you need further information about handling vendor balances, check this out: Write off customer and vendor balances.
I'm also adding these guides you can read on how to manage vendor transactions:
We're always here if you need extra help with this one or with QuickBooks in general. Just leave your reply to this thread. Take the best care!
RE: What is the correct way to first apply the charge on our credit card bill in QB and then make sure the vendor's balance is paid down at the same time so that it reflects the correct balance we owe?
Use Pay Bills to pay vendor bills with a credit card, just like you would to pay them out of your bank account.
As you pay the bills, pick Credit Card as the payment method, and then pick your credit card account:
This will create a special type of Credit Card Charge that looks sort of like the special Bill Payment Check created when you pay bills with your bank account:
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