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When you have a supplier that you also trade with as a customer, it is possible to set up the system to allow you to make only a net payment of the difference between the AP debit and AR credit. This topic explains how.
To enable netting off to take place, you must first set the relevant controls on at both AP and AR Company level. You will then need to ensure that you have those suppliers that are also customers linked to the relevant customer account using the Associated Customer link. Once linked, the supplier and customer can have their controls set to enable netting off and to indicate which way netting off is allowed. It is possible to net off such that:-
You will need to ensure that the settings on the customer and supplier are compatible with each other as in the table below:
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Supplier Value |
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Allowed |
Not Allowed |
Debit Only |
Credit Only |
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| Customer Value |
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Allowed |
ü |
û |
û |
û |
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Not Allowed |
û |
ü |
ü |
ü |
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Debit Only |
û |
ü |
ü |
û |
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Credit Only |
û |
ü |
û |
ü |
In addition, a new control account will need setting up in AP to take postings to the AP netting off account. A similar control in AR will also be required which is provided by attaching an appropriate account to a netting off sub type defined at the company level.
A new enquiry is provided that will display details of the AP and AR balances for a Customer / Supplier link. The enquiry (MAT0) can be driven from a supplier or customer perspective and allows you to choose to net off a selected relationship. The net total shown on this screen is always calculated as AP outstanding value less the AR Outstanding value.
When you net off in this way, a background process is submitted which will generate the relevant transactions on AR and AP to settle the two accounts. GL postings will also be generated as a result of the netting off process. Transactions are generated as follows:
The transaction reference will contain the prefix NETAR on AP and NETAP on AR to identify that it was created as a result of netting off.
A transaction for the difference will be posted to AP as the calculated difference multiplied by -1 and to AR as the calculated difference. Postings are then generated to GL as follows:
If an offset transaction for 117.50 is created then the postings expected are:
OFFSETAR |
117.50 (New Control account on MGAD) |
Creditors |
117.50 |
If an offset transaction for 117.50 is created then the postings expected are:
Debtors |
117.50 |
OFFSETAP |
117.50 (This will be the GL Account associated with the Transaction Legend) |
See also
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© Advanced, Jan 2021 |
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