Hi ssbm,

Thank you for posting in the Community and for the detailed information.

You can record the supplier advance payment in QuickBooks Online as an expense and use the Accounts Payable if you'll be expecting future bills on a later date. Then, link the two transaction together when making a Bill payment. Here's how:

To record the supplier advance payment:

1. Click on the +New button.
2. Click on Expenses, and select the supplier name under Payee, select a bank account under Payment account, date.
3. Under Category details choose Accounts Payable.
4. Under Amount enter the figure or lumpsum amount paid to the supplier. You can also enter a description like advance payment or something for easy tracking.
5. Click on Save or Save and new.

You've now record the lumpsum figure you've paid to your supplier. When you're ready to make an order, create a Bill and select the items you've ordered. The bill will add the quantity in your inventory list and then, you can use the advance payment to pay off or close the bill.

1. Click on +New button or go to Expenses tab, and select Suppliers.
2. Select the supplier name and click on New transactions.
3. Click on Bill.
4. Under Payee select the supplier name.
5. Under Item details, select the product/item you've purchased, enter a quantity and select a GST code.
6. Click on Save or Save and new.

When you're ready to apply the advance payment/credit to that Bill, click on Pay Bill or Make Payment for the specific Bill and then look for Outstanding Transactions, tick box for Bill and Expense to link them together and close off the bill. Remaining amounts/credit should still show if you have remaining credits from the supplier.

Message us back if you have additional questions about QuickBooks Online. I'll be here to help you. Take care!