17 Nov Ask the Expert – Joint Checks
Ask the Expert – Joint Checks
Q – I have a question regarding how you would handle the posting of a joint check to accounts payable. In the construction industry it is quite common for checks to be made out jointly to the contractor and supplier – so how do you show in the accounts payable that the check is for a particular invoice and reduce your accounts payable by that amount. For example: ABC Plumbing gets a check from his customer for services rendered made out to ABC Plumbing and XYZ Supplier. If ABC Plumbing”s bookkeeper has entered the invoices from XYZ Supplier at the full amount – how can the joint check be put against the invoices to reduce the accounts payable?
A – The easiest way is to set up a “joint check” bank account. It will serve as a clearing account so the balance should always be zero. ABC Plumbing would enter the receive payment from the customer so that the invoices show as paid. The deposit should be to the “joint check” account. A payment is then created through the pay bills procedures for the same amount as the check from the customer, with the bill payment being issued from the “joint check” account. By choosing to print checks from the “joint check” account using the voucher type check, the detail will be available for the supplier to see how the payment should be applied. The check is endorsed and forwarded with the printout to the supplier.