Invoices deducted from Collection Services Provider payments

RachNCC

Hi there,

 

We have a collection service provider that is handling one of our customers debts and I was wondering how to complete the entries for the payments that have been made to us from the collection service provider on behalf of the customer as they have been deducting their invoices from the payments we receive. Please let me know if you need any additional information.

 

Thank you

Steven_M

Hi @RachNCC 

 

Just to fully understand the situation, you basically have a supplier that has an outstanding amount, rather than you paying that amount, the amount is used to reduce a customer payment?

 

If so, the following process would be the one I would use. Might be good to run past your accounting advisor to ensure that it will work for yourself and situation:

1. Create a holding bank account:
   1. Navigate to Accounts>>Accounts Lists.
   2. Select New.
   3. Give the account a number, name and set the account type to be Bank.
   4. Select OK.
2. Once that account the account has been created, navigate to Purchases>>Pay Bills.
3. Choose that newly created account as the Pay from Account.
4. Process payment on the supplier's bill (as per normal).
5. Once recorded, go to Sales>>Take payments.
6. Choose the newly created account as the Deposit to Account.
7. Process the customer payment for the amount that the supplier has charged/deducted from the payment.

The above process will close the supplier's bill to show that payment has been made. It will also reduce the total amount of the customer's invoice by that payment amount so you can record how much the "customer" payment into your main bank account.