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QuickBooks for Contractors Tip – Receiving & Applying Joint Checks

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A QuickBooks for contractors tip about receiving and applying joint checks from a general contractor to pay a lower tier subcontractor or material supplier for work completed  or materials on a construction project.

QuickBooks tipsQuite frequently, in the construction industry, a contractor will receive a joint check from a General Contractor to pay their lower tier subcontractors or material suppliers for work completed and/or materials delivered to the construction project’s job site.

Unlike many high-end construction accounting packages, QuickBooks doesn’t have a way to handle this automatically — or easily.

This QuickBooks for contractors tip provides what we consider to be a best practice when a situation like this arises.

Problem:

Your company, Sam Subcontracting, received a $10,000.00 joint check from Joe’s General Contracting; which is made out to both your company AND O’Fallen Gravel {your Vendor/Material Supplier} who delivered sand, gravel, and crushed rock to a jobsite.  The $10,000.00 was included in your most recent invoice totaling $45,000.00 that you sent to Joe’s General Contracting AND you have a $10,000.00 invoice from O’Fallen Gravel in Accounts Payable.  Amy, your bookkeeper, isn’t sure how to correctly receive this payment against your own Accounts Receivable AND correctly apply this payment to your Accounts Payable.

Solution:

When Amy is ready to receive the payment against the invoice issued to Joe’s General Contracting AND record the payment to O’Fallen Gravel, she should do the following:

  • Verify that she has a special “Clearing” Account in her QuickBooks Chart of Accounts that is a “Bank” type – if one does not exist she should create it by going to the Lists menu -> Chart of Accounts -> Account -> New -> Type = Bank  -> Continue -> Account Name = Clearing -> Save & Close.

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  • Click the Receive Payment icon on the QuickBooks Home Page – OR – from the Customers menu -> choose Receive Payments.  Received From = Joe’s General Contracting -> Amount = $10,000.00 -> Date = Current Date -> Pmt. Method = Check -> Check # = Check Number -> Memo = Joint Check issued to O’Fallen Gravel -> Deposit to = CLEARING ACCOUNT.  Click Save & Close.

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  • The balance in the Clearing Account should now be $10,000.00.
  • Click the Pay Bills icon on the QuickBooks Home Page – OR – from the Vendors menu -> choose Pay Bills.  Choose the O’Fallen Gravel bill -> Method = Check -> Select Assign check number -> Account = CLEARING ACCOUNT.

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  • Click Pay Selected Bills.
  • In the Assign Check Numbers window – enter the number of the check that you received from Joe’s General Contracting.

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  • Click OK
  • The balance in the Clearing Account should be 0.

Make sure that you also have the proper Lien Waive and Release forms.

We hope you found this QuickBooks tip to be useful — if so please take a moment to leave a comment, share it on your favorite social media site or click the +1 button below.

10 Responses to QuickBooks for Contractors Tip – Receiving & Applying Joint Checks

    About Your Host:

    Nancy Smyth, Certified QuickBooks ProAdvisor

    Nancy Smyth, Sunburst Software Solutions, Inc.
    QuickBooks Construction & Payroll Expert


    I've been using and supporting QuickBooks products since the early 1990's. I've worked with thousands of contractors, assisting them with QuickBooks setup, Certified Payroll Reporting requirements, AIA Billing and Weighted-Average Overtime.


    QuickBooks is a powerful product, but learning how to use it in your construction business can be difficult. I hope you find resources available here to be helpful.

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