If a customer also invoices for a service provided and takes the payment for the service from the sale of goods how do I account for this in Quickbooks

Hi s-wirght

To confirm your question, you invoice the customer and receive payment from the customer, however they are also a supplier and you therefore pay the supplier invoice with the money you receive?

@s-wright 

In QB the customer and the supplier are separate

invoice the customer and receive payment, deposit that payment to a cash account

after entering the bill, use pay bills, make a partial payment on  the bill from the cash account in the same amount as received, then pay the balance due if any from an actual bank/CC account

Sorry I can not address how VAT comes into this