If I open a Contra account for paying a supplier who is also a client.
Do I pay the whole invoice into the contra account, pay off the supplier then transfer the remainder to my business account?
(The supplier doesn’t actually supply any goods. It’s just a fee they charge on my invoices.)
When I set up a Contra account, which type of bank do I use? Current account/equity account/merchant account?
Thanks in advance
Hello @davepike
Which type of bank do I use? Current account/equity account/merchant account?
You are best setting it up as a Merchant account.
Do I pay the whole invoice into the contra account, pay off the supplier then transfer the remainder to my business account?
That’s exactly right
e.g.
- Sales Invoice £100 - pay in full using contra merchant account.
- Purchase invoice £50 - pay in full using contra merchant account.
*Transfer the remaining £50 to you bank account.
Balance on the contra merchant account is Zero
Thank you Steve for your reply.