[Question] Quickbooks - capture advance payment to a supplier

[Lynda]

Hi All, my question is as follows:
We have a person that does work for us as and when required. She needed a new instrument in order to carry on working and didn't have the money for the layout of this item. We bought it for her and have an agreement that as she does work she will invoice us, but instead of us paying her we would work off the amount. Once she's worked off all the money then we will start paying her in monetory value again. How is the best way for me to keep track of this in Quickbooks?

[Justloadit]

Are you VAT registered?

[Dave A]

As you will be receiving invoices (bills), I assume you have categorised this person as a supplier, so the easiest solution is to treat the payment as an advance and capture the payment against the supplier account.

Using the Write cheques form:
The Bank account will be the account from which you made the payment
The Payable to will be the supplier
In the Expense tab, the expense account will be Accounts Payable. (Use O for outside scope of VAT for the VAT column or leave blank).

This will create a credit in the supplier's account against which you can allocate bills as they come in.

If the credit crosses over a financial year end, technically the credit will have to be reflected slightly differently in the final accounts, but for management accounts purposes, this is the easiest solution.

[Lynda]

Hi, yes we are.

[Lynda]

Thank you, Dave, I will do it this way. Much appreciated.