Contra Settlement? how does this work?

[tomdickandharry]

I have a client who has an outstanding invoice for over 2 months. We have since had them do some work for us, with there invoice out weighing ours.

I want to send them the difference, but have raised them an invoice already for the full amount, and they have done the same.

Can someone please advise how i do this?

 

[Robert Pearce]

Both of you should raise invoices for the full value of the work you've each undertaken, so you don't need to worry about that.

As far as payment goes, you just pay them the difference as you suggested.

That just leaves tidying up your accounting records. Following the payment, these will show a trade debtor of £x due from your client but also show a trade creditor of an equivalent amount due to the client. If you use accounting software, it will normally allow you to do a contra entry that will remove both of these outstanding balances. If it doesn't, you can post a dummy sales receipt and a dummy purchase payment to clear the two balances yourself.