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3rd party Pays the sub-contractor

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I enter the bill. The bill is entered under an item and placed on an invoice. The invoice is sent to the customer. The customer has their bank directly cut the checks to the bills on the invoice including my profit to me. Now I have a bunch non payed bills and an invoice with only a partial payment. I do I clean up my books? I purchased construction and advanced #2 but the owner needs a loan asap.

QuickBooks Desktop

qbteachmtAnswer

Level 11

You are describing something like "Bank uses construction loan to pay my subs" or "I got third party checks to sign over to the subs."

You treat them the Same. First, you use Receive Payment for the total, and Deposit to a Bank type of account you name Clearing or Barter.

Now pay the bills from the Barter Bank.

The remaining balance here should be your share. You use Banking menu > Transfer, to checking, for the actual Net you have, that you called your "profit." It is the Net Banking, and not really profit, of course.

Now Barter Bank or Clearing Bank should be 0 for this date; that's why it is called Clearing or Barter. It is "We avoided trading all of that banking in reality, and just traded all the Values."

Have you discussed with your own CPA if these Subcontractor costs are your revenue and expense; they might be your Work In Process Other Current Asset, instead.

qbteachmtAnswer

Level 11

You are describing something like "Bank uses construction loan to pay my subs" or "I got third party checks to sign over to the subs."

You treat them the Same. First, you use Receive Payment for the total, and Deposit to a Bank type of account you name Clearing or Barter.

Now pay the bills from the Barter Bank.

The remaining balance here should be your share. You use Banking menu > Transfer, to checking, for the actual Net you have, that you called your "profit." It is the Net Banking, and not really profit, of course.

Now Barter Bank or Clearing Bank should be 0 for this date; that's why it is called Clearing or Barter. It is "We avoided trading all of that banking in reality, and just traded all the Values."

Have you discussed with your own CPA if these Subcontractor costs are your revenue and expense; they might be your Work In Process Other Current Asset, instead.

C

ChristineR1

A different version of this scenario:

I have a client, and one project assigned to that client. I invoice them from my company, and there are other contractors also working on this project who bill the client directly. I need to cost track their bills, but I do not pay their bills or receive payment for their bills. How do I track these 3rd Party bills on my project (for completeness)? The barter method would be quite tedious as we have these type of 'pass-through' bills frequently.

Thank you in advance!

Christine

T

twinkler06

I’ve got you covered, @SedonaGC.

When recording your barter transaction, make sure you've added your barter partner as a vendor for the bill and customer for the invoice. And if your business operates on a cash basis, the invoice payment and bill payment should both be dated with the same date as the invoice or bill.

Also, ensure that the date period you selected when running the Profit & Loss report is correct. You can utilize the Verify and Rebuild Data tool if you’ve done all of this and the issue remains.

Here’s how:

First, choose Window and then select Close All.
Go to the File menu, and then click Utilities.
Select Rebuild Data.
Follow the onscreen instruction to back up your data.
When the tool finishes, select OK.
Navigate to the File menu, then hover over Utilities.
Click Verify Data and select Rebuild Now once QuickBooks finds an issue with your company file.

Please know that you'll need to log in to your QuickBooks Desktop account using the single-user mode when performing this process.

You can read this reference about customizing reports in QuickBooks to learn more. This provides information about our report features to help your experience better.

I appreciate you for joining this thread. If you need further assistance with your report, just leave us a message below. We're always here. Take care!

So I've always done it like the instructions said above. Where I treat it as if they were paying us then we paid vendors so used a clearning bank account to show the in and out for the 3rd party payment. No issues. Revenue remains the same and the receivable is lowered and the vendor invoices are reflected as paid. In my scenario now the Customer is now showing as a deductive change order so the revenue (contract value) needs to be reduced. Some of which goes against the Retainage Receivable. I've got my revenue #'s correct and my retainage withheld correct but I cant seem to get my Retainage Receivable correct. First being the debit to retainage receivable as a credit memo to show the offset of the Deductive Change oRder that lowers the Contract Value (Revenue). But I also have for the same amount the 3rd party pymt to the clearing account which is offset by using that clearning account to reflect the vendor payment. My issue now is if they are assuming its a deductive change order on our end then why do I need to show it like they "paid us" for that invoice (via a clearning account) as its a credit memo vs a payment. However if I dont show that 3rd party pymt via a clearning it will mess up the payment to the vendor that hits that same clearing account. and zeroes it out.

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