Dear @lubos,
after seeing how the WHT account works how about creating something I would call Suppliers and Customers accounts, ie sort of Control Accounts prepopulated by Suppliers or Customers instead of Special Accounts. This kind of accounts will.speed up the registration of prepayments, credits vs customers and so on.
Or, if you want to read differently, completely separate accounts (from accounts receivable and payable) with subledgers made of customers or suppliers.
You can already do this with Control Account made up of Suppliers/Customers. You can use this to track Security Deposits, prepayments etc if they occur frequently in your business. You just have to clone the customer and make a slight change to the name (with an extension for example). If my memory serves me right, we had something like that in the past (Customer/Supplier Credits), advances were automatically transferred to another GL account and disclosed separately on the balance sheet.
But I don’t agree with keeping advances from customers and advances to Suppliers in different GL accounts unless there is a way these balances will be transferred automatically to the contact’s AR/AP account to settle receivables/payables when invoices are issued or balances appear on their AR/AP accounts. I’m not a programmer but having all the transactions related to a contact in one account allows the programmer to achieve many things with ease.
Your memory is correct. The separate accounts were deprecated as part of a general streamlining of how advances/deposits are handled.
In my research at the time the change described above was implemented, I discovered roughly half of accountants prefer the combined approach. The other half prefer separate credit accounts. Combining things seems easier when credits are short-lived and indistinguishable. Separating things works better when credits last longer (such as very long lead items requiring substantial deposits) and are associated with specific purposes. Separate accounting avoids the need for special accounts to avoid automatic allocation.
It is required by law, at least here in Italy
I’m not asking for an automatism for suppliers’ debits or customers’ credits. I’m asking for a flag to activate customers or suppliers subledgers under some accounts which are not accounts payable or receivable. Something very simple. Like the subledger of withholding tax which populated of suppliers.