Showing results for 
Search instead for 
Did you mean: 
Level 1

Workflow for Client Advances

I need assistance on the correct workflow for Client Advances (Asset). If I have a vendor bill that is chargeable to a client, but this is an Asset not an expense.  When the client pays their invoice, the software lists the payment as a negative in the asset account. It should be a wash in the end. What is the workflow for this, so when it the cost is incurred it goes to the asset account and when it is paid (reimbursed by client) it is taken back out of asset account?  The funds advanced on behalf of the client(s) are required to be tracked, do I need to Asset accounts, one as unbilled and one as billed?  Please advise as I cannot seem to get any scenario to work correctly.

Thank you

4 Comments 4
QuickBooks Team

Workflow for Client Advances

I'll guide you on the things you can do, @Leo72.


I suggest creating a clearing account which is used in QuickBooks to transfer money from one account to another without moving it directly. This is like a holding account that holds your fund until you’re ready to shift it.

This account is also known as a Barter or Wash Account since we always take out the same amount as we put in. You won't have to reconcile this account because it doesn't have any money in it.


To do that, follow these steps:

  1. Open the Accounting menu and click on Chart of Accounts.
  2. From the Chart of Accounts screen, hit New tab.
  3. Select Bank for the Account Type. You can choose any detail type you want for the clearing account.
  4. Fill in the Name for the account.
  5. Ensure you don't type in any amount on the balance section before clicking Save and close.


For future references, you can access our page: Help articles for QuickBooks Online.


The Community is always available to help you further if you have other concerns with this matter or QuickBooks. Stay safe!!

Level 1

Workflow for Client Advances

Can you please go thru the workflow from beginning to end ? Appreciate your help 😊


Workflow for Client Advances

Greetings, @Leo72.


Thanks for getting back to us here in the Community. Allow me to join the conversation and share some information about your concern in QuickBooks Online (QBO).


Based on the workflow you've shared, may I ask if you're referring to the inventory asset account assigned to the item(s) used in the invoice? If so, you're right. The system will automatically decrease the inventory asset account once the invoice is created/paid.


Currently, there isn't a direct way to take that back out of the asset account. You can consider creating a Journal Entry (JE) to offset it. Before doing so, I highly suggest consulting your accountant or accounting professional for guidance on which account receives the debit and credit side of the transaction to ensure your books are accurate.


Here's how to create a JE:


  1. In QBO, click the + New option at the upper left.
  2. Select Journal entry.
  3. Enter the necessary information in the desired fields.
  4. Hit Save and new or Save and close.


If you don't have an accountant yet, you can find one near you. Visit this link to find accountants based in the US: Just add your address in the Find and accountant field.


You can also visit our support page anytime if you need tips, resources, video tutorials, and more. Just select each topic to learn extra information.


I'll be right here to keep helping if you have further concerns with QuickBooks. Take care and have a great day.

Level 1

Workflow for Client Advances

Good Evening !


I am following up on this.  I need a workflow for Law Firm where advances paid on behalf of the client (and to be reimbursed) are set up as an Asset. The outlay of money to vendor and the payment received need to go to the asset account not expense.  I believe the Workflow should be:


Enter Invoice from Vendor in AP, but chargeable to client Asset Account (Client Advances Unbilled)

Pay the vendor invoice 

I invoice my client with this charge for reimbursement. ( here is where I stuck - do I select Client Advances Unbilled again)?

When the client pays  invoice, the payment should be back to Client Advances Billed.

I want two accounts as Assets so I know what Advances have been incurred and not billed (UNBILLED) and what Advances have been billed and not paid yet.

  I have been trying different scenarios, but nothing seems to work, so I am reaching out to see how other law firms are setting up and handling their advances on their balance sheet for this to work correctly.

The way it works now, when the Advance is billed it takes it out of client Advances unbilled (which it should) and into AP.

When the client is billed it takes it from A/P and puts in A/R and when it is paid it puts a negative amount in Client Advances Billed.

  I could make a GL entry once I bill it to credit Client Advances unbilled and debit Client advances billed and it would work, but since the system auto pulls it from client advances unbilled and puts it in A/P I am unable to do this. I have attached a screen shot of set up. Any help on a better workflow that would work correctly is appreciated as this seems to be software set up issue I am having  


I appreciate your time and assistance. Thank you

Need to get in touch?

Contact us