Need to credit a customer invoice, company owes portion on inventory purchased from same company.

I can share a situation that I recently encountered?  Our G/C paid for sand that was delivered to his jobsite earlier than we were on the job.  So I owed that G/C the cost of the sand. 

I made a Credit Memo under the Customer-Job (G/C) and applied it to the G/C's Invoice; which placed the cost of the sand in COGS and reduced the amount that the G/C owed to our company.  Hope it helps.

@BT1340 

Make sure you have a bank Clearing Account set up in QB.  Pay the $700 vendor bill using the Clearing Account.  Then receive a $700 payment on the customer invoice using the same Clearing Account.  The $700 "credit" has been applied and you now have just the balance of $250 due on the customer's invoice.

Hi there, BT1340.

I agree with, Rainflurry. Let me lay out the steps to record the customer payment.

First, set up a clearing account:

1. From the Lists menu, select Chart of Accounts.
2. Right click anywhere in the Chart of Accounts page, then select New.
3. In the Add New Account window, select the Bank radio button.
4. Click Continue.
5. You can enter Clearing Account as the Account Name.
6. Ensure that the opening balance is set to 0.
7. Hit Save & Close.

Second, pay the bill using the Clearing Account created earlier. Here's an article for the detailed steps in paying the bill: Pay bills in QuickBooks Desktop.

You can also pin this article for the complete list of Accounts Payable workflow: Accounts Payable workflows in QuickBooks Desktop.

Feel free to mention my name whenever you have concerns about recording bills.

I am understanding on the payment for the invoice to the clearing account. What I am not understanding is how to receive the payment that will credit the customer invoice. When we receive payments, the proceeds go to undeposited funds. So, I should do that, and then deposit the funds into the clearing account, which will zero out the account? 

Appreciate the help!

I've got you some steps on how you can record customer payments that will credit the customer invoice. 

Once you set up the clearing account, we can use this to record the transaction by creating a journal entry.

1. Create a Journal Entry.
2. Add the amount (AP) from which you are moving money.
3. Add the Clearing account.
4. Save the Journal Entry.

Then, pay the bills in your QuickBooks Desktop account. Once done, proceed to the next steps.

1. Create a second Journal Entry.
2. Add the Clearing Account.
3. Add the AR account to which you moving money.
4. Once done, pay the invoice using Receive payment to link the Journal Entries together.

Additionally, you can utilize these resources to help manage your invoices and customer transactions in QuickBooks: 

• Record the invoice payment
• Deposit your customer’s payment

Fill me in if you need clarification with the steps I outlined above. I would gladly assist you as soon as possible. 

While awaiting instructions, I received payment for customer invoice,,then deposited that amount into clearing account effectively zeroing out the -700 balance in clearing account. Same effect I believe. Thanks to all!

While awaiting instructions, I received payment for customer invoice,,then deposited that amount into clearing account effectively zeroing out the -700 balance in clearing account. Same effect I believe. Thanks to all!

Hi again, Rainflurry.

I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.

Keep safe and have a great rest of the day.