Reducing Payments Made to a Vendor Who Is Also a Customer
There are times when one of your customers is also one of your vendors. This procedure explains how to "short pay" your Accounts Payable invoice and net that amount against the vendor/customer’s Accounts Receivable invoice.
For example, assume that a customer owes you $1,000 for a project you completed. Because the customer also happens to be one of your vendors, you owe him/her $1,500 for items that you purchased. Rather than swap checks, you decide to reduce the vendor’s A/P check and apply the difference against the A/R account balance.
Part A of this procedure creates a credit memo to "back charge" the customer/vendor in the amount he/she owes on the A/R account. Part B of this procedure, in essence, "pays" the invoice using the funds created in Part A.
PART A – Entering an A/P credit in the amount applied to the customer's account
In this section, you will enter an Accounts Payable credit memo in the amount that you "paid" to the customer/vendor's Accounts Receivable balance. Because the customer is also a vendor, you are going to create a credit memo to reduce the amount of your payment to reflect the amount applied in Accounts Receivable.
On the Site Map, clickVendor Invoices.
In the Job field, enter the job number, if applicable; otherwise, press Enter to bypass this field.
In the Customer code field, enter the vendor's code.
In the Invoice # field, enter an invoice number.
In the Type field, use the drop-down list to select Credit Memo.
Press Enter to bypass the Subcontract # field.
In the Invoice date field, enter the date of the invoice or press F4 to select a date from the Date Change window. This date should correspond with the date entered in the adjustment entered in Accounts Receivable.
In the Amount field, enter the amount that you applied to the customer/vendor's account.
In the Remarks field, enter any applicable comments about the transaction and then press Enter. The Properties window automatically displays.
Review the information in the Properties window and then click OK to return to the Invoice Entry screen.
Complete the Quantity, Equipment code (if applicable), Description, Um, and Unit price fields.
In the G/L account field, enter a suspense or contra account code or press F4 to select from a list of valid G/L account codes. Make a note of this G/L code.
In the Amount field, press Enter to accept the default amount based on the amount you entered in the Invoice portion of the Invoice Entry screen.
Complete the remaining applicable fields and then click OK until the Update button displays.
Print the A/P Transaction Register.
In the A/P Transaction Update screen, select Continue and then click OK until you return to the Site Map.
PART B – Applying the A/P credit memo against the customer's balance
In this section, you will enter an adjustment for the amount that you want to short pay the Accounts Payable invoice.
Part A, in essence, creates a credit memo to "back charge" the customer/vendor in the amount he/she owes on the Accounts Receivable account. Part B, in essence, "pays" the invoice using the funds created in Part A.
On the Site Map, clickCash Receipts / Adjustment Entry.
Complete the Customer code and Transaction type fields.
TIP: Use an adjustment transaction type that uses the suspense or contra account used in the G/L account field in Part A of this procedure.
Enter the transaction date and dollar amount.Note:
The dollar amount entered here is the amount that you are going to short pay your Accounts Payable invoice.
Apply the adjustment against the outstanding invoice and then click OK until the Update button displays.
Click the Update button.
In the Cash Receipts Journal screen, complete Customer, From G/L date, and Through G/L date fields or press Enter to accept the software defaults.
Click Print or Preview to view the Cash Receipts Journal.
In the Cash Receipts Update screen, select Continue and then click OK until you return to the Site Map.