Learn how to make contra payments in QuickBooks Online.
If you do business with a company who is both your supplier and your customer, a contra entry is often used to offset a purchase invoice and sales invoice.
For example: Your company has an invoice of £500 for a customer named Mr Smith, but Mr Smith is also your supplier who you owe £1000 for a bill.
To make a contra payment, a journal entry must be created for both debtor and creditor using the invoice with the lower value in order to offset the two invoices. In this example, it’s for £500.
In QuickBooks, select + New and select Journal entry. The follow these steps:
- For line 1, select Debtors (Accounts Receivable) in the Accounts column.
- Enter the credit amount in the Credits column.
- Enter the name of the customer in the Name column.
- For line 2, select Creditors (Accounts payable) in the Accounts column.
- Enter the debit amount in the Debits column.
- Enter the name of the supplier in the Name column.
- To save the journal entry, click Save.
- Open the outstanding invoice and select Receive payment.
- Use the journal to pay off the full outstanding balance and Save.
- Open the outstanding bill and click Make payment.
- Use the journal to settle the outstanding amount, leaving the remaining balance to be paid later.