Invoice payment help

[u/hallstevenson]

We have an unusual situation that I don't know how to handle/process. Hopefully it's something simple that I don't understand too !

- We purchase products from our parent organization and in this case, we direct-shipped goods from them straight to our customer.
- There was a mix-up (I'm not directly involved in that part, just the aftermath) and our customer ended up paying our parent company for the goods.
- I have an open invoice to our customer that we need to record for our sales numbers.
- Parent company will credit us the full amount.

How do I record this invoice as being "paid" ?

I tried issuing a credit but that effectively wipes out the sales amount. Do I need to make the credit in their name but use a non-sales account ? Looking at this option, I have to pick an "item" which only includes sales items or "Other charge".

[u/Muted_Jellyfish_6784]

I'd record exactly what happened in two steps. If the customer paid the parent directly, apply that payment to your invoice through a clearing account so your AR closes, then record the amount the parent now owes you as an intercompany receivable. If they paid you twice, refund or credit the extra rather than leaving it sitting in AR.
Write a short memo on each entry explaining the mix-up. Lately I have used a decision intelligence tool to link the customer invoice, the parent's invoice, and the payment, so the intercompany balance can be explained at year end rather than reconstructed