Credit note problems

I have invoiced a company a few times over these last 3-4 months and they therefore have an outstanding balance.
Last week I sold something for them, I invoiced it and collected the money. Therefore I’d like to be able to lower their outstanding balance.
I can’t seem to be able to do any sort of credit note other than against an invoice, not the outstanding account balance.
Any thoughts please ?

That’s the way Quickfile credit notes work. I have raised this issue a few times in the past, there are many workarounds depending exactly what you want to achieve but no simple increase/decrease account balance option.

Ok, so the client has an outstanding invoice balance of £1730 currently. I have sold some of their products in an agreement and have invoiced and collected the money myself.
Therefore, ideally they would of paid the invoices from myself and then invoiced myself for the products I have sold.
However, they want to just lower their outstanding balance each time we sell some products.
Hope that makes sense ?

So what exactly is going on here with who is invoicing whom? You’ve invoiced them for some things, you’ve also bought some things off them and resold those to other customers, and now the original supplier wants to offset what you owe to buy things off them against what they owe you?

They still need to invoice you for the products you bought from them (for resale), then you can use a holding bank account to contra your purchase as part payment on the original invoice. Suppliers and clients are completely separate in QuickFile so you can’t directly move the credit from one to the other, you have to use a dummy bank account with a payment in “from a customer” and a matching payment out “to a supplier”.

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Please tell me if I’ve got this wrong at any point.

First unless I’m mistaken you can’t credit note the customer because effectivly that will reduce your turnover each time you lower there balance.

But they have asked that you sell their products in return for the money, so the turnover should remain the same and their balance remains the same until the products are sold.

Once the products are sold you want to reduce the balance owed by the customer.

This all seems straight enough but for ease perhaps this method is the best.

Create a purchase at zero cost from the customer for the products you have sold. Mark it paid.

Unless of course you actually paid for their products to resell in which case I’d suspect the markup on resell to be an amount you can offset against their balance so, the purchase receipt would be valued at cost price with a payment tagged to how you paid.

The purcahase receipt category should be tagged to a capital account nominal so it stays clear of the p and l. It isn’t a business expense in theory it’s more like a capital asset.

When you sell the products, split the transaction in two parts, the first amount being the cost of their product and the second being the amount of credit against their balance.

Tag the first part of the transaction to the capital asset catagory you picked for the purchase(removing the asset from the balance sheet now it’s sold) , and the 2nd part of the transaction to the customer account. Then repay the customer balance from the customer account.

Remember, if you purchase their product to resell and pay off their balance, don’t used the full amount you receive to reduce their balance, only the portion you made a profit on. If you allocate the part of the payment which covered the cost of you purchasing their product then your out of pocket and they gain from it.

You can’t create invoices of zero balance.

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OK. If there is no purchase cost then no need to create a purchase receipt. But I’d suspect there was a cost price anyway

Thanks for the comments.

The easiest I think is just to create an invoice from the person who is a supplier and a client. Create an invoice for what I’m doing deal on for the agreed amount and pay it via contra account.
Then pay their invoices from myself to them via contra account

So this is, in effect, a contra arrangement. You owe them some money, but they owe you more. So when you collect money from the customer, rather than pay it over to them you use it to reduce the balance they owe you.

@ian_roberts is correct. You can’t raise a credit note against their balance, because you are not reducing the price of supplies you have made to them. In addition, they still need to invoice you for supplies they have made to you. The only difference is that, rather than you pay them and then they pay you straight back a different amount, you just net the two off.

A separate “bank” account, possibly labelled something like contra account, is the only way to do it. You still have to enter a purchase invoice from them, but then you pay off each sales and purchase invoice through the contra “bank account” and then transfer the balance to or from your actual bank account to clear the difference.