Offset simultaneous sales and purchase invoices

If you have a customer who is also a supplier, you may sometimes have simultaneous, outstanding sales and purchase invoices with the same business. In Manager, all sales invoices are subaccounts of Accounts receivable, while purchase invoices are subaccounts of Accounts payable. This lets you easily offset outstanding sales and purchase invoices against one another using contra journal entries.

You have a customer who owes you 1,000 from a sales invoice:

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At the same time you have made a credit purchase for 200 from this same business (as a supplier):

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Instead of paying your customer 200 while receiving 1000, you can make a contra entry decreasing the balance due on your sales invoice by the amount of the purchase invoice.

It makes no difference whether the sales or purchase invoice is larger; the procedure is identical. To make an offsetting contra entry, go to the Journal Entries tab and click New Journal Entry:

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In your journal entry, debit Accounts payable for the supplier by the smaller of the sales or purchase invoice balances. If the purchase invoice has a reference number, it can be selected. Otherwise, leave the Invoice field blank. Credit Accounts receivable for the customer and the sales invoice by the same amount.

The smaller amount in the example above is the 200 purchase invoice. So a journal entry is created:

If there are more invoices, do not select invoice numbers. Instead, enter as the contra amount the smaller of the total Accounts payable or Accounts receivable balances for the business. (Check these in the Customers and Suppliers tabs.) Manager will automatically offset outstanding sales and purchase invoices on the basis of oldest due dates. But still debit Accounts payable and credit Accounts receivable.

After making the journal entry illustrated above, your purchase invoice will be marked as paid in full, even though your payment was actually via contra entry:

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The balance due on the sales invoice will decrease by 200:

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