How to use a Customer's credit to pay off another Customer's Invoice

KB366

Overview

Sometimes, you will want to use credit from one customer to pay off an invoice from another customer.

To do this, a Clearing Account is necessary to temporarily hold the money being transferred between the two customers. The clearing account essentially acts as a bucket used for an IN and an OUT.

Process

  1. Create a receipt for the customer who is holding the money (has the credit owing to them).
    1. Set the "Receipt into" account to be a clearing account.
    2. Set the amount to be a negative amount - the amount of credit being used. This is the amount coming FROM their account.
    3. Allocate this amount to either an existing invoice (making the invoice unpaid) or to a prepayment credit (which is already negative).
    4. Click Update.

    Your money will now be sitting in the clearing account.

  2. Create a receipt for the customer who will have the amount transferred TO their account.
    1. Set the "Receipt into" account to be the same as in Step 1.
    2. Set the amount to be the amount that is being transferred.
    3. Allocate to invoices or leave unallocated to create a pre-payment credit.

Additional Notes

Always ensure you add plenty of notes on each record to annotate what you are doing and why.

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Last edit 25/09/23