If you have a customer that is also a vendor, you may want to apply their A/R invoices against their A/P balance. To do that, first you will need to set up a new GL account. Then you have a simple two step process to clear both balances.
First, set up a dummy cash account that will be used as a clearing account. Go to Maintain – Chart Of Accounts. Enter a number for your new account in the Account ID field. I would recommend giving it a number that falls at the end of your range for cash accounts. Enter a description such as A/R A/P Clearing Account. Leave the Account Type set to Cash and click Save.
Next, enter a receipt to mark the AR invoices as paid. Go to the Tasks menu and choose Receipts. Change the cash account to the clearing account you just set up. Enter the customer ID and check the invoices to be paid just like you would if you had received a check. You will need to enter something in the Reference even though there is no check number; enter something like “trade” or the AP invoice number you’re offsetting this against. The payment method isn’t important in this case, but if you want you could set up “Trade” as a payment method by going to Maintain – Default Information – Customers – Pay Methods.
Finally, enter a payment to clear off the AP invoices. Go to Tasks – Payments. Change the cash account to the clearing account, enter the vendor ID, and check the invoices that you want to offset against receivables. You can enter a partial payment amount if needed to get the total to exactly match the amount of receipt from the previous step. Enter a dummy check number before saving the payment.
The receipt will debit the clearing account and the payment will credit it, resulting in a zero ending balance. A non-zero balance in the clearing account always means that something has been entered incorrectly or is not complete.
One important note is that both the Receipts and Payments windows remember the last cash account that was used, so be sure to change it back to your regular cash account next time you enter a transaction. Or, better yet, open an existing receipt and payment and resave them before closing the windows to reset the cash accounts.
