Handling Short and Advance Vendor Payments in QuickBooks Desktop
Learn how to record short vendor payments and advance vendor credits in QuickBooks Desktop so bills, vendor balances, and accounts payable stay accurate.
Short and advance vendor payments create different results in QuickBooks Desktop. A short payment leaves a bill open. An advance payment should sit as a vendor credit until a real bill arrives. We have seen both trip up users who only run the standard Pay Bills routine, so this article separates the workflows.
Short payments: pay less than the open bill
A short payment means you are paying only part of the bill. That often happens when stock is damaged, a service is disputed, or the vendor agrees to a partial settlement. QuickBooks Desktop will accept the smaller amount and leave the remaining balance as open.
Open Vendors and choose Pay Bills. Select the bill, then type the actual amount you are sending in the payment column. If the bill carries a discount or an existing credit, apply it before completing the payment. Save the payment. The unpaid difference remains in the vendor’s account.
Advance payments: record the credit before a bill exists
If money leaves your bank before a vendor bill arrives, record it as a vendor credit. QuickBooks Desktop does not need a bill on file first. Open Vendors and choose Enter Bills, then choose the Credit type. Enter the vendor, date, amount, and the expense or other account the future bill will likely charge.
When the vendor later sends the bill, enter it as an ordinary bill. Then open Pay Bills, select that bill, and use Set Credits to apply the advance. QuickBooks reduces the payment amount by the credit and clears the bill.
What a short payment does not do
A short payment does not alter the original bill amount. It also does not close the bill unless you enter the full balance. QuickBooks Desktop continues to show the open amount on reports and in the vendor center until you pay the remainder or apply a credit.
Check the balance after linking credits and bills
After recording the payment or credit, open the Vendor Center and check the total under the vendor name. Compare it with the vendor statement. If the numbers differ, work back through the bill, credit, and payment entries. The fix is usually a missed credit or a partial payment entered in the wrong field.