First, you will need to create a new bank ‘Contra’ Holding Bank Account, you then need to update both the sales and purchase invoices as paid to/from the ‘Contra’ bank account.
If we use an example of £1000.00 outstanding on both sales and purchase invoice for the same person, the ‘Contra’ bank account will show:
1. Money In: For Sales Invoice #100** = £1,000.00
2. Money Out: For Purchase Invoice QF00** = £1,000.00
Therefore, the balance on the ‘Contra’ bank account will now be zero.
Now, if the amount paid or received is less than the contra invoice, only enter the contra amount as being paid i.e:
1. Sales Invoice = £1,000.00
2. Purchase Invoice = £500.00
Only mark £500.00 as being paid on the sales invoice and leave £500.00 unpaid on the sales invoice. Once you have paid the purchase invoice of £500.00 from the ‘Contra’ bank account, the balance will once again return to zero on the bank and £500.00 will still be outstanding against the above invoice.
Regards
Joe