TLDR: 6 band members, some pay their portion of rehearsal expenses, some don't and would rather their distribution to be reduced. What's the appropriate Band Helper finance entry to make in BH when they pay me?
Here's what I have been doing:
Step 1: I make an entry for the rehearsal expense of $120 (shared by 6 members). The $120 is paid by me (not the band).
Step 2: Two band members pay me $20 each. I have been making a 'distribution' entry for $20 as reimbursement to me.
Am I doing it right? If not, what's the appropriate entry to ensure they're made whole on the eventual distribution?
Yes, you can log a direct exchange of money between band members as a distribution. More commonly you'd use that when you give band members a share of their payment, but you can also use it when band members pay you back for an expense.
And you're right that the other approach is to wait until you distribute the next payment, and BandHelper will deduct their portion of the expenses when it shows the amount owed to each band member.