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What if a customer is also a supplier?

posted Sep 5, 2008, 9:15 AM by Unknown user

In Wavelet EMP, we cannot do GRN from a customer, and we cannot issue a sales invoice to a supplier, this clear segregation of Supplier and Customer is to ensure Account Payable and Account Receivable entries at the General Ledger are correctly entered as transactions are carried out.

Having said that, sometimes, the supplier is also a customer, in this case, amount owing to and from this customer who is also supplier will be knock off (contra off) without having actual payments or receipts.

 

In Wavelet EMP, we could do this by creating a cash book called CONTRA CASH BOOK, this cash book could be re-used for other suppliers who are also customers as well. A GL Code would need to be created for this purpose, say contraAccount, so that we can tie the cash book to this GL Code.

 

When merchant sells to Company XYZ, they are considered a customer, user could create a customer account called "Company XYZ". Since the invoice would remain outstanding until it is settled, user could click CUSTOMER -> SETTLEMENT, and put in the amount  at "Other/Contra", then select the corresponding cash book (CONTRA CASH BOOK). Note: If you do not see a drop down list to select the CONTRA CASH BOOK, please check the permissions under system administration module to do enable the drop down list.

 

Since money goes into the CONTRA CASH BOOK, the cash book will have debit balance... which indicates it is an asset (debit balance), because Company XYZ owes the merchant.

 

On the other hand, when merchant buys from Company XYZ, a supplier invoice is created on the system. Part of this supplier invoice could be paid with a payment voucher created. While creating this payment voucher, user could select the CONTRA CASH BOOK to settle this supplier invoice. This also means that CONTRA CASH BOOK is credited.

 

At the end of the day, by looking at the General Ledger "contraAccount", or by looking at the CONTRA CASH BOOK, we will be able to see if there's any outstanding balance between Company XYZ and the merchant. A debit balance means the Company XYZ is still owing the merchant, and a credit balance means the merchant is owing Company XYZ.

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