How to handle a transaction where a supplier is also a customer

This article explains how to handle transactions when a supplier is also a customer, with the result that they invoice you (e.g. for goods/services they provide to your organisation), and you also invoice them (e.g. for room hire, or for advertising in a publication you produce).

Option 1 - handle the 2 types of transaction as normal

Often the simplest option is:

• you pay them when they invoice you, as you would for any other supplier;
• they pay you when you invoice them, as would happen with any other customer.

In other words, you can simply process customer invoices (to them) and supplier invoices (to you) as you would usually for any supplier/customer.

Option 2 - deduct amounts owed from payments made

An alternative option is to deduct amounts owed from amounts paid between you and the supplier who is also a customer.

If deductions for any amounts outstanding are made from the payment amount, then we'd recommend that when you upload your bank statements into ExpensePlus, you split the transaction in question as this will simplify bank matching and processing.

Example

You owe a supplier £200, but they owe you £180. In this scenario, you should go ahead and make a payment of £20.

When the £20 'paid out' transaction appears in your bank reconciliation screen, you will need to split the bank transaction:

• add £200 as a paid out transaction
• add £180 as a paid in transaction

Note that this won't change your bank statement balance.

Then simply match the £180 incoming amount as a customer invoice payment to you, and the £200 outgoing amount as an invoice to pay.

To better understand the Bank Reconciliation module, please view the module overview video here.