Accounting for Pass Through Funds

I work with the QB Enterprise program, but I believe the process would be the same in the Online version. I often deal with a similar situation where we pay an invoice on behalf of a client. I've found the best way to handle this is to: First enter a bill from the vendor to account for the entire transaction. Second, create an invoice to the customer.
The bill is the key to the whole process. I enter that using 3 line items (provided you have your expense and income accounts set up).
This way:
1. your payable to the insurance company only shows as the net amount due to them.
2. your customer receivable shows the premium entry plus your commission
3. your commission gets posted to your income account.

Then, when you create your invoice to the customer, the charges will already be posted and when you receive payment, all of the correct accounts are hit and when you finally pay your vendor, there are no extra entries to be made.

I hope this is helpful!

Hello, I have the same issue and appreciate the response.  My question is: what category should I use when 1.) invoicing the client and then 2.)creating the bill to the insurance carrier? I have been doing it wrong all along (I am not an accountant), I have been invoicing the client with a category I called "Insurance Premium Expense" and splitting out the portion that is commission to "Commission Income".  Then when I pay the Insurance Company the premium, I have been putting it against the "Insurance Premium Expense" -- I think this might be messing up my reports.  So I am hoping that we can get it straight and then go back and make edits for last year.  Help