I have a person who is both a cutomer and a vendor. We currently have an invoice in process for this person for $25. I notice that they owe us $100. Is there a way to apply the amount we owe them $25, against the amount they owe us $100, thus reducing the A/R to $75?

There's no automatic way. Enter two credit notes, one in AP and one in AR, which will reduce the balance outstanding for the vendor and the customer. Apply the credit notes against the invoices whose balances you want to reduce. Make sure to use the same GL account (it doesn't matter what account you use) for both transactions, and they will wash against each other.

Steve

Hi Sandra and Steve,

There is an integrated software solution by Link2Systems that already will do that that function, but requires installing additional 3rd party software. We created and installed the solution about 1.5 years ago for a client. It's fairly automatic.

The product is called Link2FlowThru. http://www.link2systems.com/link2-flowthru. In effect, you can select the outstanding customer invoice or overpayment, and pay down the $25 amount and the software creates a cash batch for the "payment", and a corresponding batch in AP as a credit to clear off the payable. No imports, just creates batches in AP and AR simultaneously. Then Adagio Receivables and Payables takes over and you post the batches as normal in Adagio.

We originally designed the product for Not-for-profit organizations that required an easy way to deal with deposits from government/funding agencies that needed templates for regular monthly funding (and allocations), and that needed the deposit to be applied to both AR transactions and to AP transactions. Previously, the client showed how us how they tried to create and manage the split out of the entries between AR and AP with numerous spreadsheets, and ultimately entered adjustments as Steve has suggested.

Basically, this solution addresses a need to be able to enter a deposit batch that could be applied against a block of customer/resident balances, and also allow the funds to flow through to Payables for disbursement (as a disbursing agency) as regular payments on a check run. The solution integrates with Bank Rec, and maintains the audit trail between AP and AR for traceability of the transaction. The solution can also allocate a net zero deposit between AR and AP as the requirement seems to suggest, but we're not sure you could justify it for a $25 allocation. :))

The software could also be used for National Account processing, and we are adding a new feature that will allow automatic selection of customer balances that would create an offset entry into Accounts Receivable.

The software solution licences for $1800 including $300 annual maintenance and is available from your Adagio Dealer. Installation and training is a maximum $3 hours. The solution is a real time saver.

Best,
Brian