To deal with contra payments you will need to create both the invoice your sending out and the receipt you will receive for the cash value. This can be handled in KashFlow using the following guidance.
Creating the Contra Bank Account
To create a contra account go to Bank > Add New Account and enter in the following;
- Account Name – Call this account ‘Contra Account’ or similar.
- Starting Date – the starting date should be before the first transaction, i.e. 01/01/1970
- Starting Balance – This should be 0.00
When ready, click Update.
Your contra account has now been created.
Paying the Invoice & Receipt
Next, use the payment details section on the invoice and receipt apply the payments to this bank account. Usually one party will still owe some money. If you are going to part pay for the receipt with cash then transfer the money from the appropriate bank account into the contra account. If the supplier still owes money there will be a difference in the contra account. Transfer this into your business bank account. At the end of each contra there should be a £0.00 balance in your contra bank account.