When a vendor wants a bill paid with a credit to their customer invoice

We can set up a clearing account to move the funds between bill payments to vendor and received payments from customer, @kristalynn80. I'm here to show you how.

To begin, let's create the wash account.

1. Go to Lists and select Chart of Accounts.
2. Right-click anywhere on the page and click New.
3. Choose the Bank radio button and click Continue.
4. Use Wash or Clearing for the name and select Save & Close.

Then, we'll need to create journal entries to transfer the funds. I recommend seeking an accountant's help for this part of the process.

1. Create a journal entry. 
2. Add the accounts receivable (AR) or accounts payable (AP) account from which you're moving money. 
3. Add the Clearing account. 
4. Save the Journal Entry. 
5. Create a second Journal Entry. 
6. Add the Clearing Account. 
7. Add the AR or AP account to which you are moving money. 
8. In either Pay Bills or Receive Payments, link the Journal Entries together.

Additionally, here are some articles to help you with your money-in and money-out transactions:

• Get started with customer transaction workflows in QuickBooks Desktop.
• Accounts Payable workflows in QuickBooks Desktop.

Let me know if you need further assistance setting up your clearing account. I'll be here to help you.

@kristalynn80 

It sounds like their bills exceed the amount due on their invoices so this will cause them to have an A/R credit.  Is that correct?  If so, create a bank account in QB called "Clearing Account'.  Enter the vendor's bills and pay them using the Clearing Account.  That creates a negative balance in the Clearing Account.  Then, receive payment on their invoices and deposit the "payment" to the Clearing Account.  You should still have a negative balance in the Clearing Account since the total of the bills exceeded the invoices.  Next, create a journal entry that moves the balance in the Clearing Account to an A/R credit for the customer: debit Clearing Account, credit A/R for the balance in the Clearing Account.  You should now have an A/R credit for the customer that you can apply to future invoices, the current bills and invoices are paid, and the Clearing Account is $0.