Netting off invoices

Netting off invoices

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Hi,

If my company owes £1000 to company B, but Company B also owes my company £200, could I raise an invoice for £1000 and a credit note for £200 or is this not permitted? 

Any reference to the standards would be most appreciated.

Thank you

Replies (4)

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Stepurhan
By stepurhan
14th Apr 2014 17:25

Right of offset

Only if there is an agreed right of offset in place. Unless you have an inalienable right to receive your money no later than you have to pay them, the two items have to be shown separately.

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By austinho
14th Apr 2014 17:29

Netting off

If the balances already exist are there not already invoices in place? If so then if A and B agree why not pay £800 and clear both balances in both sets of books?

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By johngroganjga
14th Apr 2014 17:36

Apart from whether you can do it or not, I am not sure what raising the documents you are asking about would achieve.

If your company owes £1,000 to B, you must already have received an invoice from B addressed to your company for £1,000.  Likewise if B owes your company £200 you must already have raised an invoice for that amount.  I assume that these are valid invoices, for agreed amounts, and there is no dispute about them.

The next step I would have thought would be that you would pay B £1,000, and B would pay you £200, or perhaps you just pay B £800 and you both put a contra though your books.

Why though would you want to raise another invoice - this time for £1,000? Then B would owe you £1,200, and you would owe him £1,000.  Why, even more so, would you then want to issue a credit note for £200?  That would reduce the amount B owes you to £1,000.  You would still owe him £1,000?

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RLI
By lionofludesch
15th Apr 2014 08:39

In my experience ......

In my experience, the most complicated thing you can explain to a client is netting off and contra payments.

I've been trying to get one of my clients to see auction sale statements as two transactions for over 20 years.  He still can't see it because he only banks one cheque.

 

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