Set-off
GeneralSettling two debts between the same parties against each other instead of paying in both directions. What you owe a business and what it owes you cancel out up to the smaller amount, and only the difference remains to be paid.
Why it matters
When you both sell to and buy from the same party, a set-off saves two bank transfers that largely cancel out and clears overdue invoices sooner. It must be recorded carefully, because the invoice is settled without any money arriving, and your receivables have to show that.
Worked example
You invoiced a subcontractor 5 000 for office space and it invoiced you 3 000 for development work. A set-off of 3 000 settles its invoice in full and leaves 2 000 outstanding on yours.
In Flowtly
A set-off declaration starts from the payment reminders queue. You pick your invoices and the party's cost documents, the two totals must balance, and each invoice's outstanding amount drops by the amount set off. Flowtly records the declaration; it does not send it to the other party or create a payment.
Related terms
In the knowledge base
See it live in Flowtly
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