How do I notate customer payments made direct to my vendor?

I've got a couple of steps and info to share to handle these payments in QuickBooks Desktop, @kelper62.

Yes, you can create a general journal entry to record the payments made by your customer directly to your vendor. Before doing so, you'll have to set up a clearing account to move your payment from one account to another. You can follow the steps below to create one:

1. Go to the Lists menu, then select Chart of Accounts.
2. Right-click anywhere in the Chart of Accounts, then select New.
3. Select Bank as the Account type, then click Continue.
4. Enter the clearing account name and other details you want to include.
5. Once done, click Save & Close.
   
   

Then, create a bill that is billable to your customer by following this guide:

1. Go to the Vendors menu, then select Enter Bills.
2. Select a vendor and enter other details.
3. In the Expenses tab, then choose an expense account.
4. Enter the amount and select a customer.
5. Once done, click Save & Close.
   
   

Afterward, you may now link the bill to an invoice:

1. Go to the Customers menu, then select Create Invoices.
2. Select a customer.
3.  In the Billable Time/Costs window, choose Select the outstanding billable time and costs to add to this invoice?, then click OK.
4. Click the Expenses tab, then select the bill you've previously created and click OK.
5. Once done, click Save & Close.
   
   

Now, you can create journal entries to apply for the payments and transfer them to your vendor. Here's how:

1. Go to the Company menu, then select Make General Journal Entries.
2. Select the Clearing account you previously created, then enter the amount in the Debit column.
3. On the next line item, select Accounts Receivable, enter the amount in the opposite column, and choose a customer.
4. Once done, click Save & New.
5. On the new entry, select Accounts Payable, enter the amount in the Debit column, and choose a vendor.
6. Select the Clearing account on the next line item, then enter the amount in the opposite column.
7. Once done, click Save & Close.
   
   

Then, record a bill payment and link the entry together:

1. Go to the Vendors menu, then select Pay Bills.
2. Click the Due on or before dates section to locate the bill.
3. Select the bill, then in the Discount & Credit Information For Highlighted Bill section, click Set Credits.
4. Click Done to apply it to your bill.
5. Once done, hit the Pay Selected Bills button, then Done.

Lastly, record an invoice payment and use the Unused credits from the entry:

1. Go to the Customers menu, then select Customer Center.
2. Select the customer, then in the Transactions tab, select the invoice you create, then click Receive Payments
3. In the Unused Credits section, click Apply Credits, then Done.
4. Once done, hit Save & Close.
   
   

Furthermore, you can run different financial reports available in QuickBooks Desktop. 

Also, you can customize these reports to filter their data and follow your reporting preferences. 

Let me know if you have other questions about this topic, so I can check on them for you. I'm also here if you need anything that's QuickBooks related. Have a great day!

Hi kelper62,

Hope you’re doing great. I wanted to see how everything is going about your concern with recording customer payments to a vendor you had last Tuesday. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at any time.

Looking forward to your reply. Have a pleasant day ahead!

Hello - I have a similar situation.  However, my customer invoice reflects a partial vendor amount.  My customer sent a joint check to the vendor to pay for the materials used, and the other check to my company.  How do I insure that both checks are recorded on the invoice, but the vendor amount to not show as a deposit into our QB account? HELP.

If you prefer not to record the payment intended for your vendor, spicke2990. Let me help you in creating a cash account in your chart of accounts. This will enable you to monitor the amount paid by your customer for the invoice.

Here's how:

1. Go to your QBDT account. On the menu bar, click Lists. Then, select Chart of accounts.
2. Under Account, click the dropdown button. Then, select New.
3. Choose Bank, then click Continue.
4. Enter any name of the account. Then, leave the Opening balance to Zero.
5. Click Save & Close.

After setting up a new account, proceed to generate a bill for the payment to the vendor. Then, make the payment to the vendor using the newly created account. Proceed to write a check for the vendor to ensure your records are accurate.

I'd also recommend reaching out to an accountant to ensure that your records are accurate.

Furthermore, you can refer to this article to learn how to record bank deposits in QBDT: Record and make bank deposits in QBDT.
 

Comment on the post if you still have concerns about recording your paid invoice. I'm always here to help you.