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I have a customer who is also a vendor. They have open invoices with my company and we have unpaid bills that we owe them. Is there a way to deduct the amount that they owe us as a customer and apply that amount to the balance that we owe them? If they make a credit memo for me to use against bills that we owe them, how can I mark their open invoices they have with me as paid?
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Thanks for posting this question in the Community. I'd like to join you here and offer help, GETTAccounting.
At the moment, there's no option to directly link or deduct payment from a customer's balance to an open bill. However, you can use a barter transaction or a clearing account to offset the amount.
A clearing account is something that you will use to move amount from one account to another in cases where you can't directly move funds. You can also use this if you want to write off a receivable against a payable or vice versa. Here's how:
Once done, select this account in the Deposit To field when receiving the payment against the invoice. Then, use the same account when closing out the bill so they will just zero out.
Aside from that, you can also create a journal entry to write them off. Here's an article that talks about this process for more details: Set Up a Clearing Account.
However, I recommend reaching out to your accountant for additional advice on this matter. This is just to make sure that the transactions are recorded properly to maintain accurate bookkeeping.
Please don't hesitate to reply to me and let me know if you're to record both transactions as paid. I would also love to get back here and offer my help if you need anything else.
Thanks for posting this question in the Community. I'd like to join you here and offer help, GETTAccounting.
At the moment, there's no option to directly link or deduct payment from a customer's balance to an open bill. However, you can use a barter transaction or a clearing account to offset the amount.
A clearing account is something that you will use to move amount from one account to another in cases where you can't directly move funds. You can also use this if you want to write off a receivable against a payable or vice versa. Here's how:
Once done, select this account in the Deposit To field when receiving the payment against the invoice. Then, use the same account when closing out the bill so they will just zero out.
Aside from that, you can also create a journal entry to write them off. Here's an article that talks about this process for more details: Set Up a Clearing Account.
However, I recommend reaching out to your accountant for additional advice on this matter. This is just to make sure that the transactions are recorded properly to maintain accurate bookkeeping.
Please don't hesitate to reply to me and let me know if you're to record both transactions as paid. I would also love to get back here and offer my help if you need anything else.
You will need to use an undeposited funds account to channel the transactions thru.
However, it's far better if you pay each other, cash-flow thru bank accounts is healthier than writing off against each other.
Thank you so much for your help JenoP, and thank you for including pictures and instructions on how to set that up. I really appreciate it! :)
Thank you jaapkrijger, I agree that would probably be the best thing to do, I just wanted to see if there was another way. I appreciate your help!
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