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E2015
Level 2

third party payments

Hello,

 

My customer has been invoiced and paid off 3 deposits on a machine. On the 4th and final invoice, my customer informed me that they will finance the remaining balance and our company will receive a payment from a 3rd party.  

 

Is there a way to receive payment on an invoice from a 3rd party or do I need to create a separate invoice? How would I tie everything together? 

Solved
Best answer February 15, 2022

Best Answers
jamespaul
Moderator

third party payments

Hello, E2015.

 

Thanks for following-up! I'd like to take it over from here and clarify the steps to help you record the payment from a third-party company. 

 

There's no need to create another invoice for the third-party company. What you'll want to do is to create a customer account for them, then transfer the balance using a journal entry. 

 

First, create a customer account for the third-party company. Simply click the Customers menu, then select Customer Center.

 

Click the New Customer & Job button, then add the company's details. Skip this part if you've already created a profile for them. 

 

After creating a profile, create a clearing account. We will be using this a medium to move the balance:

 

  1. Go to your Chart of Accounts from the List menu.
  2. Right-click on the window and select the New button.
  3. Set the Account Type as Bank, then hit Continue
  4. Set the Account Name as "clearing" or something similar. 
  5. Click Save & Close

 

Next, create a payment entry under the company's profile:

 

  1. Right-click on the third-party company's profile.
  2. Select Receive Payment
  3. Under the PAYMENT AMOUNT field, enter the amount paid. 
  4. Add a reference number if needed. 
  5. Click Save & Close.
  6. Proceed with OK on the pop-up window. 

 

This will create a credit on their account. We'll use this to move the funds. Next, create a journal entry to move the funds:

 

  1. Click the Company menu. 
  2. Select Make General Journal Entries.
  3. Add the Accounts Receivable account for the first line, then add the Debit amount (amount paid). 
  4. Select the clearing account for the second line, then add the amount for the Credit part.
  5. For the name, add the third-party company's profile.
  6. Hit Save & Close

 

je1.PNG

 

Then, you'll want to close out the payment entry by linking the journal entry together.

 

Simply go to the third-party company's customer account, then open the Payment transaction. Check the journal entry you've created, then hit Save & Close

 

je2.PNG

 

Next, create a journal entry under your customer's account:

 

  1. Open the Make General Journal Entries function again.
  2. Add the clearing account for the first line, then enter the Debit amount.
  3. Select the Accounts Receivable account for the second line, then enter the Credit amount.
  4. Add the customer's account under NAME.
  5. Hit Save & Close

 

JE3.PNG

 

Finally, tie it all together by opening the customer's invoice. Click the Apply Credits button, then check the journal entry for this customer profile. Hit Done to close out the transactions.

 

JE4.PNG

 

For references about these steps, you can check this article: Transfer customer credit from one job to another in QuickBooks Desktop.

 

Need help reconciling your accounts and closing out the current period? Check out this article if you need a guide: Reconcile an account in QuickBooks Desktop.

 

Do you have more questions in recording your customer transactions? Or do you need help with a specific task? Let me know and I'll keep an eye out for your reply. I'll see you soon. 

View solution in original post

4 Comments 4
RenjolynC
QuickBooks Team

third party payments

Welcome to the Community space, E2015.

 

I'll give steps to help you record the transactions.

 

If you haven't recorded the 4th and final invoice in your account, you'll want to create the transaction so you can tie it to the payment.

 

Here's how: 

 

  1. Go to Customers Create Invoices.
  2. From the Customer: Job drop-down, select a customer or customer job. If the customer or job is not on the list yet, you can select Add New.
  3. Fill in the relevant information at the top of the form like the Date Invoice #Bill to/Sold to, and Terms.
  4. In the detail area, select the item/s. Note: When you select or add an item, the description and amount are automatically populated based on the description and unit cost entered when it was set up. You can delete or modify this when creating invoices.
  5. Click Save & Close.

For reference, please check out this article: Create an invoice in QuickBooks Desktop.

 

Once you receive the payment from the third-party, open the invoice and click on the Receive Payment icon. The detailed instructions are added in this link: Receive and process payments in QuickBooks Desktop.

 

To help manage your customers, you can open this guide: Get started with customer transaction workflows in QuickBooks Desktop.

 

If you have any additional questions or need help with other features, please let me know in your reply. I'll be around to give the steps. Take care and stay safe.

E2015
Level 2

third party payments

Thank you for your help.

 

Yes, the 4th invoice has been created and is addressed to my customer. Is there a way to receive payment from a third party on this invoice or do i need to create a new invoice addressed to the 3rd party? 

jamespaul
Moderator

third party payments

Hello, E2015.

 

Thanks for following-up! I'd like to take it over from here and clarify the steps to help you record the payment from a third-party company. 

 

There's no need to create another invoice for the third-party company. What you'll want to do is to create a customer account for them, then transfer the balance using a journal entry. 

 

First, create a customer account for the third-party company. Simply click the Customers menu, then select Customer Center.

 

Click the New Customer & Job button, then add the company's details. Skip this part if you've already created a profile for them. 

 

After creating a profile, create a clearing account. We will be using this a medium to move the balance:

 

  1. Go to your Chart of Accounts from the List menu.
  2. Right-click on the window and select the New button.
  3. Set the Account Type as Bank, then hit Continue
  4. Set the Account Name as "clearing" or something similar. 
  5. Click Save & Close

 

Next, create a payment entry under the company's profile:

 

  1. Right-click on the third-party company's profile.
  2. Select Receive Payment
  3. Under the PAYMENT AMOUNT field, enter the amount paid. 
  4. Add a reference number if needed. 
  5. Click Save & Close.
  6. Proceed with OK on the pop-up window. 

 

This will create a credit on their account. We'll use this to move the funds. Next, create a journal entry to move the funds:

 

  1. Click the Company menu. 
  2. Select Make General Journal Entries.
  3. Add the Accounts Receivable account for the first line, then add the Debit amount (amount paid). 
  4. Select the clearing account for the second line, then add the amount for the Credit part.
  5. For the name, add the third-party company's profile.
  6. Hit Save & Close

 

je1.PNG

 

Then, you'll want to close out the payment entry by linking the journal entry together.

 

Simply go to the third-party company's customer account, then open the Payment transaction. Check the journal entry you've created, then hit Save & Close

 

je2.PNG

 

Next, create a journal entry under your customer's account:

 

  1. Open the Make General Journal Entries function again.
  2. Add the clearing account for the first line, then enter the Debit amount.
  3. Select the Accounts Receivable account for the second line, then enter the Credit amount.
  4. Add the customer's account under NAME.
  5. Hit Save & Close

 

JE3.PNG

 

Finally, tie it all together by opening the customer's invoice. Click the Apply Credits button, then check the journal entry for this customer profile. Hit Done to close out the transactions.

 

JE4.PNG

 

For references about these steps, you can check this article: Transfer customer credit from one job to another in QuickBooks Desktop.

 

Need help reconciling your accounts and closing out the current period? Check out this article if you need a guide: Reconcile an account in QuickBooks Desktop.

 

Do you have more questions in recording your customer transactions? Or do you need help with a specific task? Let me know and I'll keep an eye out for your reply. I'll see you soon. 

E2015
Level 2

third party payments

Thank you so much for the detailed step by step instructions. I believe this is exactly what I need. I will be receiving the payment by the end of the month to apply the steps you've given me. Thank you again for your time. 

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