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Frequent Explorer **

invoice credit memo bill

Using Quickbooks desktop  -- contractors.

 

We have a vendor who botched a delivery which resulted in us doing cleanup, which we billed them for.

So, I generated an invoice to them for the cleanup costs.

They issued a credit to us which we then want to apply to later blls we receive from them.

 

How do I handle this in Quickbooks?

 

So far, I have an invoice for the cleanup amount.

A credit memo for the credit amount, and 

a bill from them for the amount due on subsequent orders.

 

If I apply the credit memo to the invoice, it then doesn't seem to be available to pay the "bill" to the vendor.

 

Do I delete the invoice and just apply the credit memo to the bill?

Do I delete the bill since it is covered by the payment?  Do I enter the credit as a "discount" on the bill?

 

Any guidance is welcome!

 

Solved
Best answer 06-05-2019

Accepted Solutions
QuickBooks Team

Re: invoice credit memo bill

You don't need to delete the invoice, @Finaco.

 

Since you and your vendor are exchanging services, this is called a Barter. To record a barter transaction, you need to enter an invoice and a bill for the services being exchanged.

 

To start off, set up a Barter account (it may also be called a clearing or wash account):

 

1. Go to the List or Company menu at the top.
2. Pick Chart of Accounts.
3. Right-click anywhere, then New.
4. Choose Bank, then Continue.
5. Enter the Account Name, then Save & Close.

 

Once done, delete the Credit Memo. Then, receive the payment against the invoice and enter the amount bartered:

 

1. Go to the Customers menu.
2. Pick Receive Payments.
3. Select the Customer/Vendor.
4. Enter the amount bartered on the Payment Amount section.
5. Deposit it to the Barter Account.

 

After that, pay the bill using the barter account to zero out its balance:

 

1. Go to the Vendor menu.
2. Select Pay Bills.
3. Click the bill to be paid.
4. On the Account section at the bottom, choose the barter account.
5. Hit Pay Selected Bills to complete the process.

 

That should record the exchange of services. For additional information, check out this article: Set up a Clearing Account, Barter Account or Wash Account.

 

Keep me posted on how everything goes in the comment section. I'll be here if you have any follow-up questions about the process. Take care and have a good one.

3 Comments
QuickBooks Team

Re: invoice credit memo bill

Greetings, @Finaco.

 

You can create a vendor credit for the credit amount and apply them to the bills. Let me provide additional details and help you from there.

 

When the credit was given as payment for the botched delivery and can be applied to future bills, you can create a vendor credit in QuickBooks.

 

You can follow the steps below in recording a vendor credit:

  1. Click on Vendors from the menu bar.
  2. Choose Enter Bills.
  3. Select the Credit button.
  4. Enter the vendor name.
  5. Enter the necessary information for the credit.
  6. Click on Save & Close.

 

To apply the credit to the bill, kindly follow these steps:

  1. Open the bill.
  2. Click on Pay Bill.
  3. Select the bill.
  4. Click on Set Credits.
  5. Select the vendor credit.
  6. Click on Done.
  7. Click on Pay Selected Bills.

 

Also, if you want to learn more "How do I" steps, you can visit our Help Articles.

 

Don't hesitate to let me know if you have any other concerns. I'll be around to assist you.

Frequent Explorer **

Re: invoice credit memo bill

So, I am assuming that this means that I should delete the invoices that were generated in order to let the vendor know that they needed to pay us...and then just follow the instructions you detailed.

I know how to make an invoice and pay it from a credit memo.  And I know how to generate and apply a credit vendor credit.  What I don't understand is if ALL THREE are relevant to my situation here.

QuickBooks Team

Re: invoice credit memo bill

You don't need to delete the invoice, @Finaco.

 

Since you and your vendor are exchanging services, this is called a Barter. To record a barter transaction, you need to enter an invoice and a bill for the services being exchanged.

 

To start off, set up a Barter account (it may also be called a clearing or wash account):

 

1. Go to the List or Company menu at the top.
2. Pick Chart of Accounts.
3. Right-click anywhere, then New.
4. Choose Bank, then Continue.
5. Enter the Account Name, then Save & Close.

 

Once done, delete the Credit Memo. Then, receive the payment against the invoice and enter the amount bartered:

 

1. Go to the Customers menu.
2. Pick Receive Payments.
3. Select the Customer/Vendor.
4. Enter the amount bartered on the Payment Amount section.
5. Deposit it to the Barter Account.

 

After that, pay the bill using the barter account to zero out its balance:

 

1. Go to the Vendor menu.
2. Select Pay Bills.
3. Click the bill to be paid.
4. On the Account section at the bottom, choose the barter account.
5. Hit Pay Selected Bills to complete the process.

 

That should record the exchange of services. For additional information, check out this article: Set up a Clearing Account, Barter Account or Wash Account.

 

Keep me posted on how everything goes in the comment section. I'll be here if you have any follow-up questions about the process. Take care and have a good one.