customer that is also a supplier

Posted by plbrown on March 13, 2007, 5:00 pm

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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 by catrick on March 13, 2007, 5:27 pm

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> 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

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