@helenharrison
In order to do a Contra (offset) transaction you need to create a dummy bank account - call it Contra.
Enter a payment from Mr Smith for the £100 he owes you - make sure it goes into the dummy account in QB, not into your usual account.
Enter a payment to Mr Smith for the £100 you owe him - make sure it goes from the dummy account in QB, not your usual account.
This way, both debts are cleared, your usual bank account hasn't been affected & the dummy account balance is zero.