Common Party Accounting in ERPNext: Transacting with a Customer Who Is Also a Supplier
Common Party Accounting handles unusual transactions where the same party is both a customer and a supplier, for example, raising a Sales Invoice against a party who is primarily a Supplier.
Take a common case: a user who has been making Purchase Invoices against a supplier now wants to raise a Sales Invoice against that same supplier and adjust it against one of the earlier purchases. Enabling Common Party Accounting makes this possible.
Steps
- Go to Accounts Settings and enable Common Party Accounting.
- Create a link between the two parties:
- If the party’s primary role is Supplier, go to the Supplier master and click Actions → Link with Customer.
- If the party’s primary role is Customer, go to the Customer master and click Actions → Link with Supplier.
- Create a Sales Invoice against the Customer that was set as the secondary party in step 2.
- On submitting the Sales Invoice, a Journal Entry is posted automatically, creating an advance balance against the linked Supplier.
- This Journal Entry advance can then be used to reconcile against a Purchase Invoice.
NOTE
The key to the whole flow is the party link plus the automatic Journal Entry. Linking the customer and supplier records tells ERPNext they’re the same party, so a sale to them can be turned into an advance and netted off against what you owe them on the purchase side.
TIP
Use this whenever you both buy from and sell to the same business and want to settle the two sides against each other rather than exchanging full payments. The linked advance keeps the net position clear and saves money moving back and forth unnecessarily.
Related Topics
- Accounts Settings
- Sales Invoice
- Purchase Invoice
- Journal Entry
- Customer
- Supplier
SUMMARY
Common Party Accounting lets you transact with a party that is both a customer and a supplier — such as raising a Sales Invoice against a supplier and adjusting it against an earlier purchase. Enable Common Party Accounting in Accounts Settings, link the two party records (Actions → Link with Customer/Supplier), then raise a Sales Invoice against the secondary Customer. On submission, a Journal Entry automatically creates an advance balance against the linked Supplier, which you can then reconcile against a Purchase Invoice netting the two sides cleanly.
