This guide is to explain how each vendor transaction affects the Vendor Balances with regards to who owes whom the money and how that affects the GL.
The following explains when the balance will be displayed positively or negatively.
If a line item on a transaction results in a credit balance for the Accounts Payable Account the amount on the Vendor Balances page will be displayed positively, for example $100.00.
If a line item on a transaction results in a debit balance for the Accounts Payable Account the amount on the Vendor Balances page will display negatively, for example ($100.00).
The following explains whether the Accounts Payable Account is debited or credited based upon if the line item entered on the transaction was positive or negative (if allowed).
Invoice
o Positive Line – company owes vendor (Credit the Vendor Accounts Payable Account)
o Negative Line – Vendor owes company (Debit the Vendor Accounts Payable Account)
Credit Memo
o Positive Line – Vendor owes company (Debit the Vendor Accounts Payable Account)
o Negative Line – Company owes Vendor (Credit the Vendor Accounts Payable Account)
Payment (Check or ACH)
o Positive – Vendor owes company (Debit the Vendor Accounts Payable Account)
o Negative – This is not allowed for payments
The following explains how the Accounts Payable Account is debited or credited after a void based upon if the original line item entered on the transaction was positive or negative (if allowed).
Invoice (We only support voiding at this time and as such we add a second version of the invoice with zero lines and then subtract the previous version, in effect reversing the previous version.)
o Previous Version Positive Line – Vendor owes company (Debit the Vendor Accounts Payable Account)
o Previous Version Negative Line – Vendor Owes Company (Credit the Vendor Accounts Payable Account)
Credit Memo (We only support voiding at this time and as such we add a second version of the credit memo with zero lines and then subtract the previous version, in effect reversing the previous version.)
o Previous Version Positive Line – Company Owes Vendor (Credit the Vendor Accounts Payable Account)
o Previous Version Negative Line – Vendor Owes company (Debit the Vendor Accounts Payable Account)
Payment (Checks and ACH. These can also only be voided and they are voided in the same way the other transactions are. A second version is created with a zero amount and then the previous version is subtracted essentially backing out the previous version.)
o Positive Previous Amount – Company Owes vendor (Credit the Vendor Accounts Payable Account)
o Negative Previous Amount – This is not allowed for payments