Prepayment, Proforma and offset

LeeMills77

Hi all,

I've come across a situation I can't fully grasp on its resolution and it's quite important because it's a considerable amount of money.

Basically, I have a debtor who were set up as a proforma account, then moved to a normal credit account, but it's unclear to me what they should be paying. I'll try and explain below the situation:

Debtor made two prepayments:

1st Mar -30,000
2nd Mar - 20,000

Then we raised 2 proforma invoices for the same value:

1st June 30,000
2nd June 20,000

The prepayments were used to clear other invoices, while the proforma invoices were paid using other payments they had made (confusing I know but this is the account I've inherited from somebody else).

To confuse things even further, both prepayments were offset in invoices recently raised - for example:

Invoice 123 - was 45,000, but proforma for -30,000 is included in the invoice - payable balance = 15,000
Invoice 456 - was 33,000 but proforma for -20,000 is included in the invoice - payable balance = 13,000

It's not a bookkeeping question but more a general credit control question - what exactly should the debtor be paying because I haven't quite got my head around this.

If you can explain step-by-step I'd appreciate it because it hasn't quite sunk in yet!

Thanks for reading,

Lee.