How do I "receive" payment on an invoice that was sent to collections, when the collections company took out more in fees than the invoice total?

Let me help you record the invoice and agency fees in QuickBooks Online, katieap.

We'll need to receive the actual invoice payment (without the applied fees) to close in your account.

Here's how:

1. Click the New Plus icon.
2. Under Customers, choose Receive payment.
3. Fill out the fields for Customer, Payment date, and Payment method.
4. Then, select the invoice in the Outstanding Transactions section.
5. Tick Save and close.

For more details about recording invoice payments, please refer to this article: Record invoice payments in QuickBooks Online.

Then, we can create an expense transaction to record the collections agency fees for the two invoices.

Here's how:

1. Click the New Plus icon.
2. Select Expense under Vendors.
3. Fill out the fields in Payee, Payment account, Payment date and Payment method.
4. Go to Category details section and enter the expense account in the Category column.
5. In the Amount column, type the agency fees.
6. Tick Save and close.

To learn more about creating an expense, you can check out this article: 

Enter, edit, or delete expenses in QuickBooks Online.

Once done, you can run Profit and Loss report to see the money in and money out of both transactions.

I've got a link here where you can find articles about running financial reports: Run balance sheet and profit and loss reports.

Fill me in if you need a hand with creating recurring transactions or any QBO related. I'll be here to help.

I didn't receive a payment though. That's the problem. I don't have a payment to receive. I created a journal entry to transfer the customer's balance from their customer account to the Collections Agency customer that I created. So now the Collections Agency "customer" has an open balance that needs to be closed. I don't know how to close it though if I don't have an actual payment, as the entire "payment" was automatically taken by the agency for their fees, and therefore no money was ever added to any of my accounts for this "payment". So if I were to receive payment on the open balance, I would have to choose which account to assign the payment to, but none of the accounts apply since a payment was never deposited.

Hey there, @katieap. Thanks for touching base with us again.

It would be best to consult with your accountant on this, as they'll be able to provide you with a procedure for recording payments sent to collections.

I did a quick search here on the Community and found some answers from other members that I recommend checking out. Some of our members have extensive accounting background and know the best way to record these transactions.

Let me know if you have any additional questions. I'm here to ensure your continued success.