Use this if you do business with a company who both buys from and sells to you (they act as both supplier and customer), and you want to offset a sales invoice against a purchase invoice. The purchase invoice effectively becomes a payment. This is often referred to as a Contra Entry.
To make contra entries there must be both a customer and supplier account for the company and the two accounts must operate in the same currency.
To make a contra entry you select outstanding invoices on the supplier's account to offset against the customer's account. Sage 200 creates a supplier payment and a customer payment which are then allocated to the selected outstanding invoices.
These payments are posted to the nominal account for the bank account but are not posted to the cash book and will not appear on your bank statement.
What happens when the contra entry is saved
- A supplier payment is created and allocated to the selected supplier invoices.
- The supplier account balance is updated by the payment amount.
- A customer receipt is created and allocated to the selected customer invoices.
- The customer account balance is updated by the payment amount.
The Nominal Ledger is updated. The transactions all have the same URN and a reference of Contra. This table shows the nominal account postings:
| Nominal Account | Debit | Credit |
|---|---|---|
| Debtors Control Account | Customer receipt | |
| Creditor Control Account | Supplier payment | |
| Bank Account | Customer receipt | |
| Bank Account | Supplier payment |
Note: If the invoice date is in a future period, it's not posted to the nominal accounts until the period is opened.
What do you want to do?
Offset a sales invoice with a purchase invoice using a contra entry
Next steps
If either you, or the company returns the good or services that were offset by the contra entry a credit note would be raised:
- If the customer returned goods you would raise a credit note for them.
- If you returned goods and the supplier gave you a credit note you would need to record its details.