If you receive a bill credit note from one of your suppliers, so that you don’t have to pay all or part of an bill you’ve already received from them, you’ll want to show both the bill and the bill credit note as settled in FreeAgent.
But there’s no “netting off” mechanism as such.
Instead, you need to enter a dummy payment against the bill and a dummy receipt against the bill credit note.
Here’s how to do that.
1. Dummy payment for the bill
On the list of bills here, you can see a bill for £200 + VAT, and a bill credit note for the same amount. The bill credit note cancels out the bill.
Click on the bill to go to it...
...and click the Pay Bill button.
Enter a manual bill payment, settling the bill in full, as at the bill credit note’s date, because this is likely to be the date on which you want the net off to show.
Create the new entry.
2. Dummy refund for the bill credit note
Then go to Banking, and click on your primary account, the one with the gold star next to its name. It’s important to pick the primary account because that is the one you’ve just entered the bill payment to.
Click the grey More button, and click Add Transaction.
Enter a Bill Refund (which you’ll find on the Type list under Money In) against the credit note, dated the same day as the manual bill payment.
Make sure you pick the correct bill credit note from the drop-down list.
Create this entry, too.
Opposite entries match up
Once you’ve done this, both the bill and the bill credit note will show as settled, the bill as paid and the bill credit note as refunded, on the Bills screen.
And if you then go to the Banking screen and click on your primary account, you’ll see a receipt and a payment for the same amount, cancelling each other out.
That’s it. Job done.
What about bill credit notes that don't clear the bill in full?
If the bill credit note only settles part of the bill, then follow the same steps, but when you enter the bill payment, only enter the amount that’s covered by the bill credit note. This is so that the payment and refund in the bank account are the same, and so that the amount of the bill that isn’t covered by the bill credit note still shows as due, like this.
That’s the end of this article. You’ve seen how to settle a bill and a matching bill credit note.