Contra postings are used in the event where a supplier is also a customer,
and there are outstanding invoices on both the credit and debit accounts. I.e.
the supplier is owed money but has also received an invoice from yourself.
Instead of you paying the full amount of their invoice and them paying you the
full amount on your invoice, contra postings can be used to offset the credit
and debit accounts so that they only the difference between the debit and
credit amounts is owed. For example if you have been invoiced £200 and you
have invoiced them £220, you would use contra postings to clear the £200
from both the purchase ledger and sales ledger accounts and they would still
owe you £20. If you have invoiced them £70 and they have invoiced you
£100, you would use contra posting for the £70 and you would still owe them
£30. I.e. you always use the lower amount in the contra posting.
1. Firstly you should check whether you have a contra posting control
account set up. It should be in the Balance Sheet, Current Assets
section of your nominal ledger. Refer to instructions on creating a new
nominal account if you need to set one up. Alternatively, the suspense
nominal account can be used if you do not want a designated contra
posting control nominal account.
2. Select Gx Purchase from the toolbar.
3. Choose Payments Made from the menu.
4. Control Total - enter the amount of the contra posting.
5. Default Posting Date - confirm the default posting date. Be careful to
ensure you post transactions to the correct financial period.
6. Account Code - enter the supplier account.
7. Posting Date - confirm the posting date for this payment.
8. Cheque Date - enter the transaction date i.e. the date the posting
actually occurred.
9. Cheque Number - enter a reference such as "contra".
10. Cheque Amount - enter the amount of the contra posting. Remember it
is the lower of the amounts owed to or by the supplier.
11. The outstanding invoices for this supplier will be displayed on the bottom
right section of the screen headed Transactions to be matched.
Allocate the contra payment to invoices by ticking the check-boxes in the Match column. If the amount of the contra payment is less that the
outstanding amount on the invoice, it will prompt you to create a discount
transaction for the difference. Choose No so the amount underpaid
remains outstanding on the account. The supplier is still owed this.
12. Click the Save button.
13. Then click the Update button to post the purchase ledger contra posting
to the ledger.
14. A popup box appears showing the default Bank Account Nominal
Code. From the drop-down menu, select the Contra Postings Nominal
Account or the Suspense Nominal Account.
15. Click the Ok button. The contra payment will now show on the supplier's
account and you can use Supplier Transaction Enquiry to view
it and the
invoices it has paid.
16. If you haven't already done so, you must now post the Sales Ledger
Contra Posting for the same amount as the purchase ledger contra
posting.
17. When both the sales ledger and purchase ledger sides of the contra
posting have been posted, check the Nominal Transaction Enquiry
for
the Contra Postings nominal account to make sure the balance is zero.