Tag Archives: Small Business Accounting Software

How to use the contra feature in MoneyWorks accounting system?

The contra feature in MoneyWorks is not to offset between customers owing or between the outstanding of a customer and a supplier. A contra, in MoneyWorks accounting system, is to knock off the credit note of the same customer or supplier with their invoice.

Let’s say you received a credit note of US$414.30 from a foreign currency supplier and going to use it to offset the outstanding purchase invoice of $41,430.

Method one

The first method is to select the credit note while making a payment to the supplier. This method may be more “controlled’ to some users as you can dictate the bank account, date, and credit amount to use.

Method two

Another method is to use the contra invoice feature from the command menu to offset the credit note against the invoice. Highlight the available credit note and follow the contra invoice wizard to select the invoice to offset. It’s simple and easy.

Contra a credit note with an invoice

However, this method does not have an option of changing the contra date and credit amount used. A dummy bank account, which is the bank account used in your last transaction, will add to the contra payment transaction. Since the dummy bank account is the account used in the previous transaction, and there is no accounting impact; therefore, whether the currency matches the transaction currency or not is immaterial.

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Work with lists

Transaction list, product list, name list, account list, enquiry list, historical transaction list within an item are lists in MoneyWorks.

List view is like a spreadsheet, with rows and columns of data. You can sort it by clicking on the column header or search the list by entering your request into the search bar on the top right corner. That’s how MoneyWorks presented the information. Simple and easy.

Customise list

Exchange rate
add an exchange rate field to the list

You can customise the list view, add or remove columns according to your preference. The receivable list, for example, shows the outstanding invoices with transaction currency by default. You can add an exchange rate column to show the rate used for the invoice by customising the list view (got to the Edit menu and follow by Customise List View). From the List View Option windows, highlight the ExchangeRate field from the available field window on the left and click the >Move> button to move it across to the Fields to be Displayed in this List window (on the right).

That’s it! The exchange rate column added to the receivable list.

Heading Field

heading field
add a heading field to the list

The heading is a customisable field available in the list view options window. You can use it to pick up data fields from another table, such as lookup for the category or country field of the name table from sales transaction list. Or you may add a formula (Gross-AmtPaid)/ExchangeRate into the heading field to get the home currency equivalent outstanding amount of the receivable.

fields added to the list
Data field added to the list

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Shall I set up the inter-company receivable as an account receivable type?

An account receivable account adds to the account list when you create a company file in MoneyWorks. The amount owed by the customer, for goods and services sold on credit, get updated in accounts receivable account. Renamed the accounts receivable to trade debtors (or trade receivable) if you prefer to separate trade from non-trade. Then, add other debtors or inter-company receivable to the list for tracking non-trade debtors or subsidiaries.

Accounts receivable
accounts receivable

Each debtor (the name) links to a receivable account. Whether it is a trade, non-trade, or subsidiary, the receivable account field of the name has to tag to an account receivable account to use it in invoices. The ageing process kicks in when an invoice posted.

link subsidiary to an inter-company receivable
link subsidiary to an inter-company receivable

Since a name has to tag to a receivable account, invoices to the subsidiary may have to do it outside the system if the inter-company receivable is a current asset type instead of an account receivable. The function is different, although accounts receivable is part of the current assets category. It is workable, but maintain the outstanding in foreign currency may be time-consuming.

You can set the bank, accounts receivable, and accounts payable with a foreign currency. These accounts get revaluated once new exchange rate entered. If inter-company receivable has set up as a current asset type; then, the exchange gains or losses have to record via a general journal if the outstanding is in foreign currency. It could be tedious when there are lots of entries.

Invoice subsidiary for expenses paid on behalf

Assume you have paid $10,000 to XYZ supplier, which inclusive of $2,000 worth of services on behalf of your subsidiary ABC.

As mentioned earlier, you can invoice the subsidiary when the name has tagged to a receivable account. Create an invoice to the ABC subsidiary from MoneyWorks for $2,000 and add the expense which you use for paying XYZ supplier at the detail line of the invoice. The invoice posted debit the inter-company receivable and credit expense account, which will then reduce the expense from the original $10,000 to $8,000.

The above example is for illustration, the account used may vary.

Both methods have advantages and shortfall. Consult your accountant and try out on a sample file with your existing data and compare the result before adopting either.

Note: Some accountant may name it as Intercompany or Interco instead of Inter-company.