Apply a sales invoice to a bill
Follow these steps to record a contra payment with a supplier (by a transaction of goods or services to reduce debt you owe to them), rather than paying money through a bank account. You might also refer to this as offsetting sales invoices with bills.
Contra invoicing should be treated the same as a normal invoicing situation. First, record the two transactions separately by raising a bill and a sales invoice. Then, mark the sales invoice as paid and reduce the amount owing on the bill, by following these steps:
- Go into your chart of accounts, select the Suspense account and tick the box 'Enable payments to this account'.
- Go into the sales invoice and enter the payment details, instead of selecting the bank account, select the Suspense account. Then, enter a note in the Reference field, such as 'offset bill'.
- Go into the bill and enter the payment details, in this case the amount of the sales invoice. Then select the Suspense account and enter a note in the Reference field, such as 'offset sales invoice'. .
The net effect in the Suspense account for this transaction should be zero, the Sales outstanding balance should be zero and the Purchases balance is now reduced by the amount of the sales invoice.
You should check with your accountant or bookkeeper about offsetting any debt and confirm that this is the way they would like you to offset sales invoices and bills.
Pro Bono transactions
For payments where there is a Pro Bono component, note the required information by extending the Description field details, adding a description-only or zero value line, or by adding a new line to the relevant invoice with the additional line having a negative unit price and therefore line extension total as an offset.
We would not recommend creating a credit note coded to donations because the sale will usually have sales tax, yet donations do not.
Check with your accountant or bookkeeper for the best way to code your Pro Bono transactions.