Set Off

Question asked by Martin Smith 10 months ago

I have a creditor balance that is not due. They retained part of a rebate we received from HMRC as professional fees. We created the invoice to claim the VAT on their fees. I now want to write this invoice off by a Journal: Dr. Customer ac £x Cr. Other Income £x When I put the journal through, the aged listing shows it simply as an adjustment at the bottom of the listing but the creditor balance remains listed. What should I do?

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3 Replies

Hi Martin,

Thank you for clarifying. There are two methods you can process this:

  1. Apply a purchase credit note coded to professional fees and allocate this against the bill. (No invoice is required)
  2. If you'd like to create a bill and an invoice, you will need to offset this by processing a contra transaction, please see: How to process a contra payment

Tommy

Best answer
10 months ago

Hi Martin,

In this case, rather than raising a journal, you should raise a credit note and then apply this to the relevant invoice.

Tommy

10 months ago

But credit note is related to sales invoices. This is a purchase invoice that the supplier settle by way of retaining funds.

10 months ago

Hi Martin,

Thank you for clarifying. There are two methods you can process this:

  1. Apply a purchase credit note coded to professional fees and allocate this against the bill. (No invoice is required)
  2. If you'd like to create a bill and an invoice, you will need to offset this by processing a contra transaction, please see: How to process a contra payment

Tommy

Best answer
10 months ago

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