Contractor for Production of goods

I am in need of a little help. First i would like to explain that this is the first time im using an accounting software so it is possible that it may be a simple question but im stuck and have spent couple of days trying to figure out. Anyway moving on,

So Im in a manufacturing business and have a small factory. To produce finish goods i have a “Contractor” and i pay him according to how much bags he manufactures and we do our accounts at the end of the month.
Now the difficult part, during the month he does ask for me cash (to pay his labor etc) and all this money goes to him as an advance and i deduct all this money from the amount i owe him at the end of the month and add those finished goods to inventory on hand.

Now i have no idea how to make a contractor account or where to allocate the money i give him as advance payment then deduct it from the manufacturing expense and add the finished goods to inventory in Manager.
I hope i was able to elaborate my problem. Looking forward for your kindness people. Thanks :smile:

Set your contractor up as a supplier under the Suppliers tab. When you pay him, Spend Money from a bank account and allocate to Supplier credits account and his subaccount. At the end of the month, when he invoices you, enter his invoice as a purchase invoice and Manager will automatically allocate the advance payments against the oldest purchase invoice first. Any balance will be left in the Supplier credits account.

Thanks for the tip I have made it the way you suggested. Cheers