How do I pay invoices with a credit card and then pay the credit card agency?

Use this solution if your Accounting method is Cash or Both or if your version is prior to 9.8.
If your accounting method is Accrual and your version is 9.8 or later, you can use Credit Card Management rather than this solution. See How do I set up and use Credit Card Management in Accounts Payable? for more information.

Pay the invoice with a check that uses a credit card bank account

Setup:

Set up a credit card liability account:
1. In General Ledger, from the Setup menu, select Accounts.
2. Create an account for the credit card liability. Refer to How do I set up an account in General Ledger?
Set up a bank account to represent your credit card:
- Note: For detailed instructions on how to set up a new bank account, see How do I set up a new bank account in Cash Management?
  1. In Cash Management, from the Setup menu, select Bank Accounts.
  2. Click * to add a new record, type an ID for this new bank in the New Bank Account Name box, and then click Insert.
  3. Type a description for your credit card account.
  4. On the General tab, from the AP check format list, select the Accounts Payable check format that you want to use for this bank account.
  5. In the Account type field, select Credit Card.
  6. On the GL Cash Accounts tab, from the General Cash Account list, select the credit card liability account you created above.
  7. On the GL Cash Accounts tab, select the Accounts Payable check box.
  8. Click Close.
  9. From the Setup menu, select Setup Assistant.
    - Note: Because this is a credit card account and not a bank account, enter the statement and General Ledger account balances as a negative in the Cash Account/Amount section of Step 5 Enter Balances, in Setup Assistant.
  10. Finish setting up your bank account and go live.
Set up the credit card agency as a vendor:
1. In Accounts Payable, from the Setup menu, select Vendors.
2. Create a vendor for the credit card agency.

Workflow:

Workflow step 1 explains how to record invoice payments made by credit card. Workflow steps 2 and 3 explain how to pay the credit card statement you receive from the credit card company at the end of billing cycle.

Enter the credit card charge slips as incurred:
1. In Accounts Payable, record a manual check for each credit card charge slip, made payable to the vendor on the charge slip.
  - Tip: To help identify checks used for credit card payments, use the last 4 digits of your credit card number for the first 4 digits of your check numbers.
2. When you record the check, use your credit card bank account in Cash Management.
3. Enter an invoice for the amount of the charge slip when you record your check. Expense it as you would for a regular invoice.
  - Note: If you pay numerous invoices by credit card, you may prefer to select and pay the invoices with the Print Checks task instead of the Record Manual Checks task. Select the invoices for payment as usual (Tasks, Select Invoices to Pay, On-screen List) and then select the credit card bank account in the Print Checks task (Tasks, Print Checks). Print the checks to blank paper, or to a print file by clicking Printer Setup and selecting the Print to file check box if it is not already selected.
  - The results:
    - In Cash Management, the manual checks create a credit balance on your credit card bank.
    - In General Ledger, the invoice entries from the manual checks debit your expense account and credit your Accounts Payable account.
    - The check entries from the manual checks debit the Accounts Payable account and credit the credit card liability account.
      - Note: The Record Manual Checks task does not create entries to your payable account if you enter an invoice at the same time you record a manual check and the accounting date of the invoice is the same as the check date.
    - In Job Cost, the invoice entries from the manual checks post to costs on the job. The check entries from the manual checks post to dollars paid on the job.
Enter and pay the credit card statement:
1. Enter an invoice to the credit card company vendor for the amount of the credit card statement that you want to pay with a check. Enter your credit card liability account as the expense account. Accounts Payable automatically credits the payable account.
  - Note: If you have fees that you want to record to particular General Ledger accounts, you can enter those fees as separate lines of distribution and specify the appropriate expense accounts.
2. Use your regular Accounts Payable operating bank account to pay the credit card company's invoice with a check.
  - The results:
    - In General Ledger, the invoice entry debits your credit card liability account and credits the payable account.
    - The Accounts Payable check debits the payable account and credits your operating cash account.
    - Cash Management credits the Accounts Payable operating bank account with the amount of your check to the credit card company.
Adjust the credit card bank to reflect the payment:
1. In Cash Management, from the Tasks menu, select Edit Register.
2. Select your credit card bank account.
3. Enter an addition adjustment. Use the credit card liability account as both the debit and the credit account.
  - The results:
    - In General Ledger, a neutral entry debits and credits your credit card liability account.
    - The entry in Cash Management is only to correct your credit card bank account balance to reflect the payment to the credit card company. Specify the same debit and credit account because you do not need to change General Ledger. General Ledger balances were already adjusted through the invoice and check entries.
In Cash Management, reconcile your credit card statement to your Cash Management credit card bank, each month. Remember to enter your statement balance as a negative when you reconcile this account.

Summary of the General Ledger debits and credits:

Entry	Debit	Credit
Invoice from manual check for each charge	Expense account	AP account
Check entries from the manual checks	AP account	Credit card liability account
Invoice for credit card agency	Credit card liability account	AP account
AP Check run	AP account	Cash account
CM Edit Register, credit card bank, ADDITION entry (washing entries in GL)	Credit card liability account	Credit card liability account