To access the form, click: Accounting > Service Tools > Mutual Settlements.
The Mutual Settlement documents can be used to register the settlements between the entity and its customers or the entity and its suppliers. Accounting for settlements with suppliers and customers is an important element in the ERP system. A settlement generally refers to agreement between two or more parties to offset debt documents so that a positive balance remains in any of the involved accounts.
Standard types of settlements between the entity and its customers or the entity and its suppliers:
- Mutual Settlement: When you need to offset the customer debt against the entity's debt to a third-party company that is affiliated with the customer.
- Customer Debt Assignment: When your entity needs to transfer the customer debt to another company that is affiliated with this customer.
- Supplier Debt Assignment: When your entity needs to transfer its own debt to a particular supplier to another company that is affiliated with this supplier.
- Customer Debt Adjustment: When your entity needs to write off the customer's specific bad debt directly to operating expenses.
- Supplier Debt Adjustment: When the entity needs to directly write off its debt to a particular supplier (who is out of business) directly to other income.
If, for some reason, the types of operations described above are not suitable for the reflection of an economic operation, you can use the method of reflection of the operation, telling the system the right and left parts of the entries to be received.
1. You should reflect in the program all documents that will be involved in settlements for each company (e.g. Invoice Received, Invoice, Bank Payment, Cash payment etc.).
2. In order to determine what type of debt (accounts payable or accounts receivable) each party involved in mutual settlements has, it is necessary to generate the STATEMENT OF MUTUAL SETTLEMENTS for each company.
STATEMENT OF MUTUAL SETTLEMENTS for Company B:
Based on the data from the STATEMENT OF MUTUAL SETTLEMENTS, you should fill in the Mutual Settlement.
Note. We recommend filling in the Accounts Payable tab by clicking on the Pick :
Select the correct GL account in the field GL account
STATEMENT OF MUTUAL SETTLEMENTS for Company С:
Based on the data from the STATEMENT OF MUTUAL SETTLEMENTS, you should fill in the Mutual Settlement.
The amounts on the Accounts Payable and Payee Attributes tabs in the fields must be identical.
Remember that if it is necessary to do something with accounts receivable, you should create Mutual Settlement with Transaction type Customer Debt Assignment.
If it is necessary to do something with accounts payable, you should create Mutual Settlement with Transaction type Supplier Debt Assignment.
3. After the Mutual Settlement has been posted into the system, you should check the mutual settlements between the companies. Generate STATEMENT OF MUTUAL SETTLEMENTS for each company.
STATEMENT OF MUTUAL SETTLEMENTS for Company B:
STATEMENT OF MUTUAL SETTLEMENTS for Company С:
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