How to enter contra payments in QuickBooks Online

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:

1. For line 1, select Debtors (Accounts Receivable) in the Accounts column.
   1. Enter the credit amount in the Credits column. 
   2. Enter the name of the customer in the Name column. 
2. For line 2, select Creditors (Accounts payable) in the Accounts column.
   1. Enter the debit amount in the Debits column. 
   2. Enter the name of the supplier in the Name column.
3. To save the journal entry, click Save.
4. Open the outstanding invoice and select Receive payment. 
5. Use the journal to pay off the full outstanding balance and Save. 
6. Open the outstanding bill and click Make payment. 
7. Use the journal to settle the outstanding amount, leaving the remaining balance to be paid later.