If you have a customer who is also a supplier, you may want to offset outstanding customer and supplier invoices. This is known as making a contra entry.
If you post a contra entry for an outstanding customer invoice of £/€150, and an outstanding supplier invoice of £/€200. The contra entry amount is £/€150.
After the contra entry is posted:
The invoice on the supplier's account is part paid with an outstanding value of £/€50
The customer's invoice is fully paid
Neither of the transactions appear on the current bank account
The balance on the contra entry bank account is zero
NOTE:If the contra entry includes foreign currency values then a foreign currency bank account should be used for the contra. You can only process foreign bank contras using the manual method. The balance can be zeroed with a transfer between the foreign and base bank accounts.
CAUTION:Automatic Contra Entries should not be used with:
Sage 50 Accounts Essentials
Sage 50 Standard
If you operate the VAT Cash Accounting scheme
To offset outstanding credit notes (SC, PC), outstanding refunds (SR, PR) or payments on account (SA, PA)
CIS transactions - you can use the manual routine, however, CIS transactions can't be part paid
Non-base currency transactions
Manual contra entries need to be used for these instead, using the steps below.
To record a contra entry, a sales receipt and a purchase payment must be posted. To prevent these from appearing in the main bank activity, a new bank account should be created which is only used to record contra entries.
Enter the relevant details for the new bank account:
A/C Ref*
The nominal code you want to use for the new bank account.
NOTE:If using the Sage default nominal ledger structure, we recommend using a number within the range of 1200 to 1239. These numbers are included within the existing bank accounts and the management reports are set up for these numbers.
Nominal Name
Enter a description for the new bank account, for example, Contra Entries bank account.
A/C Type
Choose Cheque Account from the drop-down list.
No Bank Reconciliation
If you don't want to run a bank reconciliation for this account, select this check box.
EXAMPLE: If you've a sales invoice of £100.00 and a purchase invoice of £/€120, a contra entry of £/€100 is posted, leaving the purchase invoice outstanding for £/€20.
To confirm this click Yes.
The contra entry posts a sales receipt, SR, and a purchase payment, PP, to the contra entry bank account for the value of the invoices, or the lesser value if applicable.
Manually contra SI, PI, SP or PR transactions
Step 1 - Create a contra entry bank account
To record a contra entry, a sales receipt and a purchase payment must be posted. To prevent these from appearing in the main bank activity, a new bank account should be created which is only used to record contra entries.
Enter the relevant details for the new bank account:
A/C Ref*
The nominal code you want to use for the new bank account.
NOTE:If using the Sage default nominal ledger structure, we recommend using a number within the range of 1200 to 1239. These numbers are included within the existing bank accounts and the management reports are set up for these numbers.
Nominal Name
Enter a description for the new bank account, for example, Contra Entries bank account.
A/C Type
Choose Cheque Account from the drop-down list.
No Bank Reconciliation
If you don't want to run a bank reconciliation for this account, select this check box.
ClickSavethen clickClose.
Step 2 - Post a sales receipt using the contra entry bank account
To clear the relevant outstanding sales invoice or sales payment on the customer's account, post a sales receipt to the customer's account using the contra entry bank account.
Click Bank accounts, select the contra entry bank account then click Customer receipt.
Complete the Customer Receipt window as follows:
Account Ref
The contra entry bank account appears.
Account*
Choose the required customer from the drop-down list.
Date
Enter the date for the sales receipt. The program date appears automatically but can be overwritten.
Receipt
Enter the required value in the Receipt box for the relevant SI or SP. This should be the lower value of the contra entry. For example, if the SI is £200.00 and the PI is £150.00, you should enter £150.00 here.
Click Save then click Close.
Step 3 - Post a purchase payment from the contra entry bank account
To clear the relevant outstanding purchase invoice or purchase receipt on the supplier's account, post a purchase payment to the supplier's account using the contra entry bank account.
Click Bank accounts, select the contra entry bank account then click Supplier payment.
Complete the Supplier Payment window as follows:
Payee*
Enter the required supplier's account reference.
Date*
Enter the date for the purchase payment.
NOTE:The date used should be the same as the date used for the customer receipt posted.
Payment
To allocate the money paid to the relevant invoice items, enter the required value in the Payment box of the invoice item line. This should be the same value as the sales receipt. For example, enter £150.00 against the relevant outstanding invoice.
Click Save then click Close.
The supplier payment posts, and the balance on the contra entry bank account should now be zero.
Contra payments on account or credits
Allocate credits or payments on account to invoices in the Bank module before using the Contra Entries option.
If you don't have any invoices to allocate to, follow the manual steps.
Step 1 - Create a contra entry bank account
To record a contra entry, a sales payment, SP, and a purchase receipt, PR, must be posted. To prevent these from appearing in the main bank activity, a new bank account should be created which is only used to record contra entries.
Enter the relevant details for the new bank account:
A/C Ref*
The nominal code you want to use for the new bank account.
NOTE:If using the Sage default nominal ledger structure, we recommend using a number within the range of 1200 to 1239. These numbers are included within the existing bank accounts and the management reports are set up for these numbers.
Nominal Name
Enter a description for the new bank account, for example, Contra Entries bank account.
A/C Type
Choose Cheque Account from the drop-down list.
No Bank Reconciliation
If you don't want to run a bank reconciliation for this account, select this check box.
Click Save then click Close.
Step 2 - Post a sales payment using the contra entry bank account
To clear the relevant outstanding credit note or payment on account, on the customer's account, post a sales payment, SP, to the customer's account using the contra entry bank account.
Click Bank accounts, select the contra entry bank account then click Customer refund.
Complete the Customer Refund window as follows:
Bank A/C Ref
The contra entry bank account appears.
Payee*
Choose the required customer from the drop-down list.
Date
Enter the date for the sales payment. The program date appears automatically but can be overwritten.
Amount
Enter the required value in the Amount box of the relevant SC or SA. This should be the lower value of the contra entry. For example, if the SC or SA is £200.00 and the PC or PA is £150.00, you should enter £150.00 here.
Click Save then click Close.
Step 3 - Post a purchase receipt from the contra entry bank account
To clear the relevant outstanding credit note, PC, or payment on account, PA, on the supplier's account, post a purchase receipt, PR, to the supplier's account using the contra entry bank account.
Click Bank accounts, select the contra entry bank account then click Supplier refund.
Complete the Supplier Refund window as follows:
Payee*
Enter the required supplier's account reference.
Date*
Enter the date for the purchase payment.
NOTE:The date used should be the same as the date used for the customer receipt posted.
Amount
To allocate the money paid to the relevant items, enter the required value in the amount box of the relevant PC or PA. This should be the same value as the sales payment. For example, enter £150.00 against the relevant outstanding PC or PA.
Click Save then click Close.
The purchase receipt, PR, posts, and the balance on the contra entry bank account should now be zero.
Reverse a contra entry
To reverse a contra entry you must delete or reverse the transactions posted due to the contra entry. To do this please identify the transaction and delete or reverse them as usual.
[BCB:19:UK - Sales message :ECB]
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