I have people that are both suppliers and customers. I've renamed them customerA and customerB. I often use invoices to part pay bills. How do I record this?
Peter
- posted
17 years ago
customer that is also a supplier
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- Vote on answer
- posted
17 years ago
Contra accounts (the majority of the time) occur when an entity can be both a customer and a vendor. The "contra" occurs when a payment is required and no money exchanges hand. For example, a customer owed you money and you owe the customer money (same for vendors). The customer/ vendor could state it wishes you to apply the amount you owe it against the monies the customer/vendor owed you. Payments would exchange by a "contra" payment.
How to handle this is to setup a bank account called "Clearing Account". You would make a "Bill Payment" using this checking account to record the payment of the customer/vendor invoice. You would then record "Receive Payment" through the same account to record the other side of the transaction. The net effect in your "Clearing Account" is zero. The customer/vendor invoice is recorded as paid and the customer/ vendor invoice is recorded as paid.
Cat