Supplier holds customer funds and deducts from purchase invoices. How to?


I have a supplier that holds some inventory. Some customers are allowed to visit this supplier and pay cash for the inventory. When the supplier bills us for services, customer payments are deducted from the total.

In manager, I currently handle this by recording a sales invoice for the customer purchase, but I don’t record a payment receipt. When the supplier sends us a bill, I record it as a purchase invoice. When I pay the invoice, I add the customer invoices (accounts receivable) to the payment as negative values, effectively clearing accounts receivable and also reducing the supplier bill to the correct total.

The problem with my approach is:

  • When customer pays the supplier cash, I don’t record this anywhere
  • If customer payments exceed the the supplier bill, I have no method to account for it

Are there better ways to correctly:

  • Record when customers pay the supplier cash
  • Apply the cash balance against the supplier invoice

I couldn’t find a guide that applied to this scenario so would appreciate some advice!

If your customers are purchasing directly from your supplier, I don’t see how this is a transaction that should be recorded in your accounts - no matter how they pay be it cash or on credit

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The supplier (of services) holds the cash funds for us and later reconcile these funds against supplier invoices. The solution is to create a cash account, record these customer payments to the cash account, and when getting billed, recording a payment with the available cash balance, and later pay the remaining balance via another transaction. If the cash balance is greater than the invoice, it can be recorded as above. When the supplier sends us the remaining cash balance, we can record it as an inter-account transfer.