How to deduct a supplier debt from a bill without any money going through account?

Morning

Wouldn't the remaining amount be £300 in the above example not £100?

Either way, just create a dummy bank a/c called 'contra' then pay off the relevant fictitious amounts using this account. Once you're done the account should show a zero balance and one of your bills should be left showing the required amount.

PS you would probably be better creating a sales invoice instead of a negative bill so as to show the figures in the P&L correctly.

thanks for the response. I am still having problems with this as the only way I can pay off negative bills without a physical transaction going out of the account is to refund the bill. Which works but I would prefer to mark the bill as paid so I can send statements directly to the suppliers without confusion.

For the record - the reason I don't create an invoice rather than a negative bill is because it will give a false impression of how much money is owing to the company. This is because of our industry. We are a modelling agency.

When a model joins the agency they agree that we can deduct things such as printing costs from them but we don't charge money - we only deduct these charges from their earnings. So if a model only earns £100 but has £200 in deductions, we kind of have to write off the missing £100. So if we put a £200 invoice on their account the problem is that there is no real guarantee we'll ever see this money so we don't like to put it in as an outstanding invoice as it can mess up our cashflow forecasting. By adding them as negative bills it avoids this problem.

But as I mention the problem is using a dummy transaction to pay off a negative bill without classing it as a refund. In order to add "Money In" as a dummy transaction it can only be linked to an invoice not a negative bill, even if I turn the supplier into a customer as well.