I have a vendor that I purchase from and who also purchases from me. How do I handle this barter transactions in QB online?

A barter transaction is one in which you buy products and services to a person (vendor) or company from whom you also sell other products and services (customer).

Set up the bartering process in QBO:

Open your vendor center and add the vendor to your vendor information screen with a “(V)” after the name.
From the home page screen > left blue navigation bar > Vendors > New vendor (upper right corner) > Fill out vendor information > Example: Barter Enterprises (V)
Open your customer center and add the customer to your customer information screen with a “(C)” after the name.
From the home page screen > left blue navigation bar > Customers > New customer (upper right corner) > Fill out customer information > Example: Barter Enterprises (C)
Set up a new bank account for your barter transactions.
From the home page screen > left blue navigation bar > Transactions > Chart of Accounts > New > Category Type = Bank > Detail Type = Cash on hand (or select one) > Name = Barter Clearing > Description = Bank Clearing – Same Vendor and Customer

Check out our helpful YouTube tutorial video. Be sure to subscribe our channel. Follow us on Twitter (@newqbo). We highly encourage you to watch the entire video.. You do not want to miss a step!

Enter Bills and Invoices:
Enter Bills and Invoices as normally would. No difference. Make sure to select Vendor (V) on bills and the Customer (C) on invoices.
For entering Bill > From the home page screen > create + sign > vendors > bill
For entering Invoice > From the home page screen > create + sign > customers > invoice

Barter Settlement

Make payment due (money out) to the Vendor (V)
Case # 1:
Vendor Bill = $600.00
Customer Invoice = $500
Balance due to Vendor (V) = $100

Pay Bills and Receive payment

To Pay Bills (partial $500) > From the home page screen > create + sign > vendors > pay bills
Payment Account = Barter Clearing (IMPORTANT)
Select “Pay” Vendor (V) checkbox
Amount to pay = Same amount as Customer Invoice (example: $500)
Starting Check No. = Non Cash Payment
To Receive Payment > From the home page screen > create + sign > customers > receive payment
Select Customer (C)
Payment Method = Non Cash (add new if needed)
Reference = Barter
Deposit to = Barter Clearing (IMPORTANT)
Select Outstanding Invoice transaction
Amount = $500
To Pay Bills (remaining $100) > From the home page screen > create + sign > vendors > pay bills
Payment Account = Bank Account (IMPORTANT)
Select “Pay” Vendor (V) checkbox
Amount to pay = $100
Starting Check No. = Non Cash Payment

Review Bank Register for Barter Clearing account (from the home page screen > left blue navigation bar > transactions > chart of accounts > view register under action column
This account should have zero balance.

Receive payment due (money in) from the Customer (C)
Case # 2:
Customer Invoice = $2,000
Vendor Bill = $800.00
Balance due from Customer (C) = $1,200

Receive payment and Pay Bills

To Receive Payment > From the home page screen > create + sign > customers > receive payment
Select Customer (C)
Payment Method = Non Cash (add new if needed)
Reference = Barter
Deposit to = Barter Clearing (IMPORTANT)
Select Outstanding Invoice transaction
Amount = $800 (partial)
To Pay Bills > From the home page screen > create + sign > vendors > pay bills
Payment Account = Barter Clearing (IMPORTANT)
Select “Pay” Vendor (V) checkbox
Amount to pay = $800 (same as vendor bill)
Starting Check No. = Non Cash Payment
To Receive Payment ($1,200 by check) > From the home page screen > create + sign > customers > receive payment
Select Customer (C)
Payment Method = Check
Reference = Customer (C) check number
Deposit to = Bank Account (IMPORTANT)
Amount = $1,200