If my customer is also my vendor, how do I offset the money I owe them and the money they owe me?

If you have a customer who is also your vendor, you have to create them as customers and vendors individually. Once the contact is created, you can link them to view the total receivables and total payables in the respective customer/vendor overview page. Upon creation, you can link them to each other. Here’s how:

• Go to Sales on the left sidebar and select Customers or go to Purchases on the left sidebar and select Vendors.
• Select the customer/vendor.
• Click the More icon and select Link to Vendor or Link to Customer.
• Click Link.

The customer and vendor will now be linked. For the item sold, you can create an invoice, and for the item purchased, you can create bills. The payment for these transactions can be recorded in the following cases:

• When the money you owe the contact and the money they owe you are the same
• When the money you owe the contact is less than the money they owe you
• When the money you owe the contact is more than the money they owe you

Before proceeding with recording the payment, first you need to create an account to record the offset amount. Here’s how:

• Go to Accountant on the left sidebar and select Chart of Accounts.
• Click + New Account in the top right corner of the page.
• Enter a suitable Account Name. For example, Offset and Adjustment.
• Select Payment Clearing as the Account Type.
• Enter the Account Code and provide a short Description for the account if required.
• Click Save.

When the money you owe the contact and the money they owe you are the same

Let’s assume you have sold an item worth ₹6000 to your contact, and you have purchased an item worth ₹6000 from the same contact. In this case, you will neither receive nor make a payment to the contact. To record these transactions in Zoho Books, you’ll need to create an invoice and a bill, and then record a payment for them. When recording the payment, you have to associate them with the Offset and Adjustment account.

To record payment for the invoices:

• Go to Sales on the left sidebar and select Invoices.
• Choose the invoice for which you want to record payment.
• Click Record Payment at the top of the invoice’s Details page.
• Enter the Amount Received.
• Select the Offset and Adjustment account as the Deposit To account.
• Fill in the other details and click Record Payment.

To record payment for the bills:

• Go to Purchases on the left sidebar and select Bills.
• Choose the bill for which you want to record payment.
• Click Record Payment at the top of the bill’s Details page.
• Enter the Payment Made.
• Select Offset and Adjustment in the Paid Through field.
• Fill in the other details and click Save.

Once the payment is recorded, the invoice and bill will be offset.

When the money you owe the contact is less than the money they owe you

Let’s assume you have sold an item worth ₹6000 to your contact, and you have purchased an item worth ₹4000 from the same contact. In this case, the contact has to pay ₹2000 to you. You’ll need to record two payments for the invoice. One to record the offset amount, and another for the payment received.

To record payment for the invoice:

• Go to Sales and select Invoices.
• Locate the invoice for which you want to record payment and click Record Payment.
• In the payment creation page, enter the date and amount as ₹4000 and select the Offset and Adjustment account as the Deposit To account.
• Click Record Payment.

Similarly, record payment again for the invoice by clicking the Record Payment button. In the payment creation page, enter the amount as ₹2000 and select the bank/cash account from which you have received the payment in the Deposit To field.

Since no payment will be made, you can record the payment for the bills using the Offset and Adjustment account. Here’s how:

• Go to Purchases on the left sidebar and select Bills.
• Choose the bill for which you want to record payment.
• Click Record Payment at the top of the bill’s Details page.
• Enter the Payment Made.
• Select the Offset and Adjustment account in the Paid Through field.
• Fill in the other details and click Save.

Once the payment is recorded, the invoice and bill will be offset.

When the money you owe the contact is more than the money they owe you

Let’s assume you have sold an item worth ₹4000 to your contact, and you have purchased an item worth ₹6000 from the same contact. In this case, you have to pay ₹2000 to the contact. To record these transactions in Zoho Books, you’ll need to create two payments for the bill. One to record the offset amount, and another for the payment made.

To record payment for the bills:

• Go to Purchases on the left sidebar and select Bills.
• Choose the bill for which you want to record payment.
• Click Record Payment at the top of the bill’s Details page.
• In the payment creation page, enter the date and amount as ₹4000 and select the Offset and Adjustment account in the Paid Through account.
• Click Save.

Similarly, record payment again for the bill by clicking the Record Payment button. In the payment creation page, enter the amount as ₹2000 and select the bank/cash account from which you are making the payment in the Paid Through field.

You can record payment for the invoices using the Offset and Adjustment amount as you will not receive any payment. To record payment:

• Go to Sales on the left sidebar and select Invoices.
• Choose the invoice for which you want to record payment.
• Click Record Payment at the top of the invoice’s Details page.
• Enter the Amount Received.
• Select Offset and Adjustment account in the Deposit To field.
• Enter the other details and click Save.