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BonnieDE
Level 1

How to record Settlement check with commission deducted

I received a settlement check from a 3rd party. Do I recored the settlement amount of $5k (agreed amount) or the check amount of $3k against the clients outstanding balance. The rest of the balance will then be written off as bad debt. What is the correct way to close out the clients books.

Solved
Best answer April 14, 2020

Best Answers
JamesDuanT
Moderator

How to record Settlement check with commission deducted

I know a way on how we can get through in this situation, BonnieDE.

 

First, we have to record the exact amount you've received from your client and apply it to the invoice.

  1. Open the affected invoice and click Receive payment.
  2. Enter the payment date and where to deposit the amount.
  3. Mark the invoice and enter the exact amount you've received ($3k).
  4. Click Save and close.

The invoice will remain open since it was only paid partially. The remaining amount would be our bad debt. Now, to write off the bad debt, here are the things that we need to do:

  1. Create a bad debt expense account
  2. Create a bad debt item
  3. Create a credit memo for the bad debt
  4. Apply the credit memo to the affected invoice

For the detailed steps, you can use this link for reference: Write off bad debt in QuickBooks Online.

 

Please let us know if you need further assistance in following the steps. We'll be right here.

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5 Comments 5
JamesDuanT
Moderator

How to record Settlement check with commission deducted

I know a way on how we can get through in this situation, BonnieDE.

 

First, we have to record the exact amount you've received from your client and apply it to the invoice.

  1. Open the affected invoice and click Receive payment.
  2. Enter the payment date and where to deposit the amount.
  3. Mark the invoice and enter the exact amount you've received ($3k).
  4. Click Save and close.

The invoice will remain open since it was only paid partially. The remaining amount would be our bad debt. Now, to write off the bad debt, here are the things that we need to do:

  1. Create a bad debt expense account
  2. Create a bad debt item
  3. Create a credit memo for the bad debt
  4. Apply the credit memo to the affected invoice

For the detailed steps, you can use this link for reference: Write off bad debt in QuickBooks Online.

 

Please let us know if you need further assistance in following the steps. We'll be right here.

saiful1
Level 1

How to record Settlement check with commission deducted

Hi we have this issue as well. 

Our situation is:
- Marketplace A is do settlement of 10,000USD. 
- Marketpalce A take 500USD as the parts of (comission, payment gateway fees and others).
- Net total of settlement of Marketplace A is 9,500USD instead of 10,000usd, so we have an issue to get close the invoices from the settlement's collection.

 

 

So will this solution solve using above solution (posted as answer above) ?

Sorry have to ask again as im so confuse to get it done in right way.

 

 

Hope someone know get this response.

RCV
QuickBooks Team
QuickBooks Team

How to record Settlement check with commission deducted

Thanks for checking in with us, saiful1.

 

Yes, we can follow the steps provided by my colleague for the settlement's collection. When invoices you send in QuickBooks become uncollectible, just record them as a bad debt and write them off. This ensures your accounts receivable and net income stay up-to-date. See Write off bad debt in QuickBooks Online (QBO) article for the steps and details.

 

You can also use other items to deduct on the invoice just make sure to enter the amount in a negative format to track it as a deduction or add a negative item on the Deposit transaction. For other options, it would be best to contact your accountant on how to best handle this one in QBO. 

 

Feel free to visit our Sales and customers page for more insights about managing your company's income and customers.

 

I'd like to know how you get on after trying the steps, as I want to ensure this is resolved for you. Just reply to this post and I'll get back to you. Have a great weekend. 

Am4040
Level 1

How to record Settlement check with commission deducted

Hello! So I have a similar question. 
We are Public Insurance Adjusters and we receive settlement checks from the insurance company, we deposit those checks to our business bank account and deduct our fee and make a check payable to our clients. How do you record those payments to the client ?

I’m currently using Online QuickBooks 

Rubielyn_J
QuickBooks Team

How to record Settlement check with commission deducted

I'm here to help record those payments to the client, @Am4040.

 

We can create a check to record the payments made to clients. Then, make sure to consult an accountant for the accounts to use. This way, your recordings are balanced and accurate.

 

Here's how:

 

  1. Choose + New and click Check.
  2. Select the Payee from the dropdown ▼.
  3. From the Bank account dropdown ▼, select the account the check withdraws money from.
  4. Complete the check fields you need.
  5. Select the Print check option if you want to open the check queue to print now. 
  6. Click Save and close.

 

For more insights, you can check out this article to help manage your checks in QuickBooks: Create and record checks in QuickBooks Online.

 

 

Feel free to leave a comment below if you have further concerns with recording payments for clients. I'll be around to help. Keep safe!

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