Set-off declarations

Flowtly Editorial Team4 min

When a company both sells to and buys from the same party, the two debts can be settled against each other instead of paying in both directions. Flowtly lets you record such a set-off declaration: which of your invoices and which of their cost documents it covers, for what amounts, and when the declaration reached the other party.

What it does

A set-off declaration records two lists that balance exactly:

  • Our invoices (what they owe us): your sales invoices to that party, with the amount set off on each.
  • Their cost documents (what we owe them): their documents recorded in Flowtly, with the amount set off on each.

Once you declare it, the outstanding amount of each of your invoices drops by the amount set off on it. Flowtly does not create a payment or a bank transaction, and does not match anything against your bank feed.

Where to start a set-off

A set-off starts from the payment reminders queue, so payment reminders must be switched on for your organization.

Go to Finance → Payment reminders (/finance/payment-reminders), then either:

  • From one reminder: click the reminder to open it, and click Declare set-off at the bottom of the panel. You do not need to tick anything first.
  • From a selection: tick the reminder (or reminders) for one invoice of the party, and click Declare set-off in the action bar. The button there is disabled if your selection covers more than one invoice, or if the reminder is not linked to an invoice.

Either way, the invoice you started from is already chosen on the next screen, and you can add the party's other invoices there. A reminder that is not linked to an invoice has no Declare set-off button in its panel.

Note: Only invoices that currently have a reminder waiting in the queue can be chosen. An unpaid invoice that is not yet overdue, or one with no reminder in the queue, cannot be set off from this screen.

Filling in the declaration

  1. Counterparty. Flowtly finds the counterparty linked to the invoice's client. Both lists are limited to that one party. If the client is not linked to a counterparty, their cost documents cannot be listed; link the client to a counterparty first.
  2. Our invoices. Tick the invoices to include. Each one is prefilled with its outstanding amount, which you can lower for a partial set-off.
  3. Their cost documents. Tick the documents to include. Each is prefilled with its document total, which you can change. A warning appears if you enter more than a document is worth.
  4. Balance. The receivable total and the payable total must be equal. Declare set-off stays disabled until they match and every amount is above zero.
  5. Reached the other party on. The date the declaration reached the other party. It defaults to today and cannot be in the future. You can also add a reference number and a note.

Click Declare set-off. The declaration is recorded straight away; there is no draft step.

What changes afterwards

  • Each invoice's outstanding amount is reduced by the amount set off on it, in the payment reminders queue and in later reminders.
  • If an invoice is now settled in full, its waiting reminders are dismissed and move to History, and no new reminders are prepared for it.
  • If an invoice is only partly settled, it stays in the queue, and later reminders state the reduced amount.

What Flowtly does not do

  • It does not prepare a declaration document or send anything to the other party. You deliver the declaration yourself; Flowtly records that you did and when.
  • It does not ask the other party to confirm or accept the set-off.
  • It does not mark the invoice as paid, and the set-off does not appear on the invoice PDF or in KSeF.
  • It does not change the balance or status of the cost documents.
  • It does not compare currencies. Make sure the amounts on both sides are in the same currency.
  • It does not decide whether a set-off is legally allowed for your debts. That stays your decision.

Note: A recorded declaration cannot be edited, withdrawn or corrected from this screen today. If a declaration was recorded by mistake, contact Flowtly support.

Who can declare a set-off

Administrators, invoice managers and debt-collection managers.

Connection map

Refers toUses upDerived fromPart of
Documented hereDocumented elsewhere
invoice billed to counterparty. invoice taxed by tax-group. cost spends against budget. cost owed to counterparty. bank-transaction reconciled to invoice. bank-connection imports bank-transaction. contract schedules payment-schedule-line. payment-schedule-line invoiced as invoice. contract agreed with counterparty. contract attached to budget. budget raises budget-alert. budget covers project. counterparty defaults to budget. counterparty defaults to project. invoice billed from project. set-off-declaration settles invoice. set-off-declaration declared with counterparty. project linked to budget. lead becomes counterparty. deal sold to counterparty.billed totaxed byspends againstowed toreconciled toimportsschedulesinvoiced asagreed withattached toraisescoversdefaults todefaults tobilled fromsettlesdeclared withlinked tobecomessold toIInvoice — A sales document issued to a client: line items, dates, tax. It is created, reviewed, previewed and then sent.InvoiceCCounterparty — The other side of a financial document — a client billed, or a supplier owed.CounterpartyTTax group — The tax treatment applied to a line, so rates are set once rather than per document.Tax groupCCost — Money the organisation owes or has spent, tracked against a budget.CostBBudget — The financial envelope an engagement is measured against — what was planned, versus what has actually been spent.BudgetBBank transaction — A movement on a connected bank account. Matching it to an invoice or a cost is what makes the books agree with the bank.Bank transactionBBank connection — The consented link to one bank that transactions arrive through. It can stop working on its own — a consent expires or is withdrawn — so it reports whether it is still working.Bank connectionCContract — The financial terms of an engagement: a structured set of payment schedule lines, in one direction or the other.ContractPPayment schedule line — One dated amount on a contract, in a direction — money owed to a supplier, or due from a client.Payment schedule lineBBudget alert — A notice that a budget has gone off plan - spending over the planned amount, or a margin below the one that was planned. It is raised by a daily check rather than by anyone asking for it.Budget alertPProject — The core organizational unit for a business initiative, client engagement or internal work. Everything tracked — time, cost, invoicing, profitability — hangs off one.ProjectSSet-off declaration — A record that your invoices to one counterparty and its cost documents were settled against each other, in amounts that balance exactly. It lowers what remains due on the invoices; it is not a payment.Set-off declarationPProspect — A company you are working but that is not a customer yet. It sits at New, Contacted or Qualified, and everything done to it is logged against it.ProspectDDeal — A sale in progress: a customer, an amount, and the stage it has reached. It cannot exist without a customer, and its stage is never blank.Deal

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