Question

Funding unpaid invoices with QBO LOC invoice can no longer be paid

Forum|Forum|9 months ago
September 14, 2025
1 reply
17 views

We wanted to see how the feature of receiving a LOC through funding an invoice would work. My banking is connected to QBO. We knew our customer would pay the invoice within the 30 days allotted. The funds were received on the 12th and I followed the instructions creating the liability account and the expense account. I attributed the deposit in banking from the LOC to the liability account and then zero expense. When I saved it applied this deposit and the invoice is now showing as paid.

In the setup directions if the customer typically uses the review and pay link that QB Capitol would intercept the payment and pay off the loan which makes sense. I know I then have a journal entry to do to balance the payment and clear undeposited funds.

However, my client contacted me. It shows the invoice as paid in full so he can't pay it. Where do we go from here with this? Further research on the net shows me this:

When you secure a line of credit (LOC) against an invoice in QuickBooks, you sell the debt to a financial institution, like QuickBooks Capital. Your customer cannot pay you directly because they now owe the money to the lender. This is known as an "intercepted payment". For your customer, the invoice you sent is now paid, and any "Pay Now" link is disabled. You have already received the cash advance from the LOC, and the lender will intercept your customer's payment to settle the loan. Inform your customer that you have arranged for the invoice to be paid via a third party. If you are using QuickBooks Capital, the system typically handles this automatically, but if your customer has a question, you should refer them to Intuit.

This is not how the system initially makes this look. It reads as though the customer will still be able to pay but you will pull the funds and apply them to the loan, makes sense but apparently this is not how it works?

QuickBooks Online

I

Irene R

QuickBooks Team

We appreciate your detailed information about the process done, Lisa2112. Let me shed some light on how QuickBooks Online Line of Credit works and ensure that your customer will pay the invoice.

Please note that your bank deposit is recorded as a liability and does not affect the invoice, since invoices are posted as Accounts Receivable (A/R). It would have been that your invoice was inadvertently paid or a credit was automatically applied. To isolate this issue, let's first undo the bank deposit you've categorized.

Here's how:

Navigate to the Bank Transactions and find the bank account where your deposit was made.
Go to the Posted section, then look for the deposit you've categorized.
Click Undo under the Action column.

Next, turn off the Automatic apply credits feature in Account and Settings to prevent automatic credit application. Then, review the invoice and delete any applied payments. After that, you can categorize your bank deposit again and resend the invoice so your customer can pay it using the payment link.

Once your customer pays the invoice within 30 days, QB Capital will intercept the payment to pay your loan. Since your customer paid through the payment link, QuickBooks will still automatically create a linked payment transaction to Undeposited Funds to mark the invoice as paid. After that, you can proceed with balancing your line of credit using a Journal Entry and Bank Deposit.

This thread is open for further questions you may have.

L

Lisa2112Author

I think my question was lost due to my giving too much info.

We took an advance LOC on an existing invoice in our system. Funds became available on the 13th. I posted the transaction using the instructions. After this the invoice shows as paid.

Our customer (who typically pays outside the normal terms but does pay) went to pay a round of invoices including the one we have the LOC on and it shows as paid in full. He can click on the review and pay link but the invoice can't be paid because there is no balance. It was our understanding that he could use the review and pay link (Quickbooks Payments) for 30 days.

Here's a further question. Does that mean he can use Quickbooks Payments for 30 days from the day we requested the LOC advance? Or, 30 days from the date the invoice was originally created? Would it matter if the invoice was past due?

J

Jessavell_A

QuickBooks Team

Your customer can use QuickBooks Payments for 30 days from the date the invoice was created, Lisa.

If your customer pays their invoice through QuickBooks Payments during the first 30 days, those payments will be automatically applied to your QuickBooks Line of Credit (LOC) balance.

However, if you don't repay the invoice within 30 days, you'll start accruing interest on the outstanding balance on day 31. You can repay the total invoice amount in 12 monthly installments at a fixed interest rate, as outlined in your loan agreement.

Here are some resources to help you learn more about how QuickBooks LOC works:

Please let us know if you have any additional questions.

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