The following are some scenarios where this article can be used:

• An Accounts Payable invoice is offset by an Accounts Receivable invoice.
• The party paying the AR invoice short-pays the AR invoice and directly pays an AP vendor invoice.
• An AR customer issues a joint check for us and the vendor.
• Accounts Receivable customer paid the vendor directly and you need to show that the receivable invoice and the payable invoice are paid.
• Accounts Receivable customer paid Accounts Payable vendor directly.
• I have an invoice where part was paid to me and part was paid to a subcontractor.
• How do I apply an AR invoice amount against an open AP balance?
• We took a loan for the income that will be coming from invoicing a customer in AR, the customer payments go directly to the bank so we do not have to cut them a check from AP. How do I handle this in the system? (Option C)
• How can I enter AP checks as AR cash receipts?
• How to apply a payment in AR to a credit in AP?

Before you begin:

Note: If you do not want any unnecessary transactions to appear in your operating bank account or General Ledger accounts, set up a clearing account in General Ledger and a clearing bank account in Cash Management as follows: 

1. Set up a Joint Clearing account in General Ledger.
   Note: For directions on setting up a new account, see How do I create a new full account in General Ledger?
   • Create an account with an Account Type of Current Asset.
2. Set up a Joint Clearing bank account in Cash Management.
   Note: For directions on creating a new bank account in Cash Management, see How do I set up a new bank account in Cash Management?
   • Use the General Ledger Joint Clearing account set up in Step 1 as the General cash account.
   • Select both Accounts Payable and Receivables (AR/JC) to use the bank account check boxes.
      

Choose one of the following options:

Note: If you want to see all transactions in your operating bank account, replace the references to the Joint Clearing bank account with your operating bank account.

Option A: The vendor/customer owes you more than you owe them and sends you a payment for the difference

1. In Accounts Payable, use Task, Print checks or Record manual/Print Quick check to pay the vendor's invoice(s). Use the Joint Clearing bank account.
   Note: For instructions on using Print Checks, see How do I print checks in Accounts Payable? For instructions on using Record Manual/Print Quick Checks, see How do I enter or record a manual check in Accounts Payable?
   TIP: There is no remittance to let the vendor/customer know this is done. You can use a payment memo in AP Select Invoices to Pay to make a note that the balance was used to pay their AR invoice(s). See How do I enter a payment memo that prints on the check stub in Accounts Payable? 
2. Enter the vendor's AP check from step 1 in Accounts Receivable as a cash receipt and apply it to the invoice(s) for the corresponding AR customer. Use the Joint Clearing bank account.
   TIP: For more information, see the AR Help topic, "About entering cash receipts."
3. Enter the payment you received from the vendor/customer as a Customer cash receipt to pay the balance of the AR invoice(s). Use your regular bank account.

Option B: The vendor/customer owes you less money than you owe them and you need to send a check for the difference

1. In Accounts Payable, use Task Print checks or Record manual/Print Quick check to pay the vendor the same amount owed on the AR invoice(s) and use the Joint Clearing bank account.
   Note: For instructions on using Print Checks, see How do I print checks in Accounts Payable? For instructions on using Record Manual/Print Quick Checks, see How do I enter or record a manual check in Accounts Payable?
   TIP: There is no remittance to let the vendor/customer know this is done. You can use a payment memo in AP Select Invoices to Pay to make a note that the balance was used to pay their AR invoice(s). See How do I enter a payment memo that prints on the check stub in Accounts Payable?
2. In Accounts Receivable, enter the vendor's AP check from step 1 as a cash receipt and apply it to the invoice(s) for the corresponding AR customer. Use the Joint Clearing bank account.
   TIP: For more information, see the AR Help topic, "About entering cash receipts."
3. In Accounts Payable, using your regular bank account, pay the remaining amount to your vendor.

Option C: The vendor/customer owes you the same amount as you owe them

1. In Accounts Payable, pay the appropriate invoice(s) and use the Joint Clearing bank account.
   Note: For instructions on using Print Checks, see How do I print checks in Accounts Payable? For instructions on using Record Manual/Print Quick Checks, see How do I enter or record a manual check in Accounts Payable?
   TIP: There is no remittance to let the vendor/customer know this is done. You can use a payment memo in AP Select Invoices to Pay to make a note that the balance was used to pay their AR invoice(s). See How do I enter a payment memo that prints on the check stub in Accounts Payable?
2. In Accounts Receivable, enter the vendor's AP check from step 1 as a cash receipt and apply it to the invoice(s) for the corresponding AR customer. Use the Joint Clearing bank account.
   TIP: For more information, see the AR Help topic, "About entering cash receipts."

How do I enter a cash receipt in Accounts receivable to be applied to an invoice or invoices?