Accounts Payable / Accounts Receivable Netting's

Description of process

Use this process to net within the accounts payable and accounts receivable ledgers. Netting is a form of payment, without funds transferred, in which invoices, difference items, payments on account and payments in advance from one customer are offset with invoices, difference items, payments on account or payments in advance from one supplier. Netting is allowed only between customer and supplier who are part of the same association. Netting must have been approved by the supplier and entered at the Supplier before netting can take place. The netting results in two payments, one for customers and one for suppliers. The payments are booked on a cash account created specifically for netting transactions. The same netting account is used for all currencies. The user can select a number of supplier invoices, difference items, payments on account or/and payments in advance in one currency for one specified supplier and a number of invoices, difference items, payments on account or payments in advance in the same currency for the customer. It is also possible to utilize parked payments. Parked payment from the supplier ledger must be entered with supplier invoices/difference items/payments on account/payments in advance, and parked payments from customer ledger are entered with customer invoices/difference items/payment on account/payments in advance. It is not possible to use the netting function if the supplier is blocked for payment or if the invoice included in a payment proposal or payment order. Netting will result in giving the supplier involved and the customer involved different matching IDs.

There is a function that handles cancellation of already made netting's. All postings related to earlier netting are automatically reversed in connection with the cancellation.

Note that information that netting has taken place is not automatically sent to the supplier/customer. This must be carried out manually.

Before you start entering information check that Basic Data Required (BDR) has been set up as per instructions in Define Financials Basics, the Set up Basic Data Accounts Payable process.