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Dealing with a supplier who is also a customer

If you have a customer who is also a supplier, set up two contact records for them: one as a supplier and one as a customer. You can then record payments and receipts as you usually do.

However, another way you can manage your payments is to offset your outstanding customer and supplier invoices by recording a contra payment. This topic explains how.

First, you need to create a separate customer and supplier contact in MYOB. You then record invoices and bills against these contacts. This is the same process as you usually do.

When it comes time to pay, you record a contra payment that offsets the sale and purchase amounts. To record the payment, you'll need to set up a contra payment category. This works like a bank account, but it's simply a clearing category which doesn't record actual cash.

OK, let's take you through it.

To create a contra payment category

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  1. Go to the Accounting menu and choose Categories (Chart of accounts).

  2. Click Create category.

  3. Leave Detail account selected.

  4. For the Type, choose Bank.

  5. For the Parent header, choose the header category under which this new category will sit. If you're unsure which to choose, check with your accounting advisor.

  6. Enter a Code that suits your category list.

  7. For the Name, enter "Contra Payment".

  8. Choose the applicable Tax/GST code. If you're unsure which to choose, check with your accounting advisor.

  9. Click Save.

To record a contra payment

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Record your invoices and bills as you usually do (including assigning the correct tax code). When you're ready to offset sales against your purchases, record a contra payment. It's a two-step process.

  1. Record a payment for your sales.

    1. Go to the Sales menu and choose Invoices.

    2. Click the ellipsis (...) and choose Record customer payment.

    3. Choose the Customer.

    4. In the Bank account field, choose the Contra Payment category.

    5. Enter the amount that you need to offset against your outstanding invoices.

  2. Record a payment for your purchases.

    1. Go to the Purchases menu and choose Bills.

    2. Click the ellipsis (...) and choose Record supplier payment.

    3. In the Supplier field, choose the supplier contact.

    4. In the Bank account field, choose the Contra Payment category.

    5. Enter the amount that you need to offset against your outstanding bills.

After recording these payments, your bank accounts aren't affected; but your receivable and payable categories have been reduced. Also, the Contra Payment category balance will be zero.