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hectorjr
Level 1

Can another customer pay off overdue invoices by a different customer? 1st customer was tax-exempt, customer paying balance is not.

 
Solved
Best answer August 08, 2020

Best Answers
Adrian_A
Moderator

Can another customer pay off overdue invoices by a different customer? 1st customer was tax-exempt, customer paying balance is not.

Yes. Another customer can pay the invoice of the other customer,hectorjr.

 

We can do this by creating a Journal Entry and then transfer the amount. Let me guide you with these steps:

 

First, we'll have to create a credit memo. This way, we can transfer the invoice amount to the other customer. 

 

  1. From the + New button, select Credit memo.
  2. In the Customer field, select the first customer you've invoiced.
  3. Enter the PRODUCT/SERVICEQTYRATE, and AMOUNT.
  4. Select Save and close.

 

Second, we'll have to create a Journal Entry.

 

  1. Click the + New button and then select Journal entry.
  2. Enter the date in the Journal date field.
  3. On the first line item, select Accounts Receivable (A/R) from the Account drop-down list.
  4. In the Debits field, enter the amount being transferred.
  5. In the Memo field, note the reason for the journal entry.
  6. From the Name drop-down list, select the name of the customer the credit is being transferred from.
  7. On the second line item, select Accounts Receivable (A/R) from the Account drop-down list. The credit amount and the memo auto-populates.
  8. From the Name drop-down list, select the name of the customer the credit is being transferred to.
  9. Select Save.

 

Then this time, let's receive the payment from the first customer. This is to remove the credit from the first customer.

 

  1. From the + New button, select Receive payment.
  2. Select the name of the customer the credit was transferred from.
  3. Under Outstanding transactions, check the journal entry you created.
  4. Under Credits, check the credit memo you need to transfer.
  5. Select Save and close.

 

Lastly, we'll have to receive the payment from the other customer.

 

  1. Select Receive payment from the + New button.
  2. Select the other customer's name.
  3. Under Outstanding Transactions, select the invoice you want to apply the credit to.
  4. Under Credits, find and check the journal entry you created.
  5. In the Payment column, enter how much of that credit you want to apply.
  6. Select Save and close.

 

When you're ready to reconcile the account, you can check this article: Reconcile an account.

 

There you have it, hectorjr. I'm always around if there's anything that I can help. Stay safe always!

View solution in original post

4 Comments
Adrian_A
Moderator

Can another customer pay off overdue invoices by a different customer? 1st customer was tax-exempt, customer paying balance is not.

Yes. Another customer can pay the invoice of the other customer,hectorjr.

 

We can do this by creating a Journal Entry and then transfer the amount. Let me guide you with these steps:

 

First, we'll have to create a credit memo. This way, we can transfer the invoice amount to the other customer. 

 

  1. From the + New button, select Credit memo.
  2. In the Customer field, select the first customer you've invoiced.
  3. Enter the PRODUCT/SERVICEQTYRATE, and AMOUNT.
  4. Select Save and close.

 

Second, we'll have to create a Journal Entry.

 

  1. Click the + New button and then select Journal entry.
  2. Enter the date in the Journal date field.
  3. On the first line item, select Accounts Receivable (A/R) from the Account drop-down list.
  4. In the Debits field, enter the amount being transferred.
  5. In the Memo field, note the reason for the journal entry.
  6. From the Name drop-down list, select the name of the customer the credit is being transferred from.
  7. On the second line item, select Accounts Receivable (A/R) from the Account drop-down list. The credit amount and the memo auto-populates.
  8. From the Name drop-down list, select the name of the customer the credit is being transferred to.
  9. Select Save.

 

Then this time, let's receive the payment from the first customer. This is to remove the credit from the first customer.

 

  1. From the + New button, select Receive payment.
  2. Select the name of the customer the credit was transferred from.
  3. Under Outstanding transactions, check the journal entry you created.
  4. Under Credits, check the credit memo you need to transfer.
  5. Select Save and close.

 

Lastly, we'll have to receive the payment from the other customer.

 

  1. Select Receive payment from the + New button.
  2. Select the other customer's name.
  3. Under Outstanding Transactions, select the invoice you want to apply the credit to.
  4. Under Credits, find and check the journal entry you created.
  5. In the Payment column, enter how much of that credit you want to apply.
  6. Select Save and close.

 

When you're ready to reconcile the account, you can check this article: Reconcile an account.

 

There you have it, hectorjr. I'm always around if there's anything that I can help. Stay safe always!

View solution in original post

hectorjr
Level 1

Can another customer pay off overdue invoices by a different customer? 1st customer was tax-exempt, customer paying balance is not.

Thank you Adrian_A! Will this work even though some of these invoices are partially paid and the second customer now paying is NOT tax-exempt? Would I adjust for this when reconciling the account? I just want to make sure I don't do anything crazy.  thank you in advance! 

RenjolynC
QuickBooks Team

Can another customer pay off overdue invoices by a different customer? 1st customer was tax-exempt, customer paying balance is not.

Thanks for getting back here and adding some details about your concern, hectorjr.

 

Yes, the process will apply to partially paid invoices. When following the steps provided by Adrian_A, make sure to adjust the amount on the receive payment page. Doing so will pay the invoice in full or leave an open balance if it's partially paid. 

 

I'd also recommend consulting with your accountant for advice. 

 

We're always around if you have any follow-up questions. Just leave a comment below and we'll get back to you.

hectorjr
Level 1

Can another customer pay off overdue invoices by a different customer? 1st customer was tax-exempt, customer paying balance is not.

Thank you Adrian_A this worked flawlessly!!

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