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Dealing with a supplier who is also a customer ( Contra )

If you have a customer who is also a supplier, you can set them up as a supplier and customer, and record payments and receipts as you usually do.However, another way you can manage your payments is to offset your outstanding customer and supplier invoices by recording a contra payment. You will need to create a contra bank account to offset.

1. Open the Accounts List window (Lists > Accounts) and click New. The Account information window appears. 2. Select Bank from the Account Type list. Enter an account number and also account type must choose “BANK”. Account name can be “CONTRA BANK PAYMENT”

Record a payment for your purchase.

  1. In the Pay Bill window, select the Contra Payment account in the Deposit to Account field.

  2. In the Supplier field, enter the supplier’s name.

  3. Enter the amount that you need to offset against your outstanding invoices. Record a payment for your sales.

  4. In the Receive Payments window, enter the Contra Payment account in the Deposit to Account field.

  5. In the Customer field, enter the customer’s name.

  6. Enter the amount that you need to offset against your outstanding invoices.

After recording these payments, your bank accounts are not affected; but your receivable and payable accounts have been reduced. Also, the Contra Payment account balance will be zero.

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