Steve,

Issuing credit notes will reduce sales and reduce cost of sales. That's not so good for a number of reasons; comparative statistics, borrowing, inventory distortions, etc. I'm not even certain the IPAs (Independent Public Accountants) would like this suggested mechanism. I've got a situation where these offsets are material in amount. A US company and a German company buy each others products for resale in their respective countries.

Why not set up a new cash account (with appropriate bank code) to "wash" these offsets? You could pretend you got the cash for the receivable and pretend you paid the cash for the payable. The normal balance of this special cash account would typically be zero.

pc