There are a couple of scenarios where a dealer will receive partial payment from a Customer for a sale, the remainder of the balance is being paid by a contra payment.
Here are are some scenarios:
A vehicle is sold with finance. and a part exchange has been brought in with outstanding finance. The dealer receives a payment from the finance company that is equal to the amount due on the vehicle being sold less the outstanding finance on the part exchange – often referred to as a Contra Payment.
A vehicle is sold at Auction, and the auction house fees are deducted from the balance due. The dealer receives a payment from the auction house for the sale total less the fees.
This article will explain how you can record the payment you received and record the contra amount to show the invoice as fully paid in DragonDMS.
We will use the Finance example to demonstrate
Scenario: A vehicle is sold with finance on the sale and on the part exchange.
The vehicle is sold for £25,000.00, with a part exchange valued at £6,500.00. The part exchange still has £4,000.00 finance outstanding. The customer is taking out £22,500.00 in finance.
The dealer will receive a Contra Payment of £18,500.00 from the finance company, this is to settle the vehicle being sold and the part exchange vehicle coming into stock.
How to process this in DragonDMS
In DragonDMS there are two separate transactions:
- The purchase of a vehicle with outstanding finance that has to be paid to the finance company (This payment is processed directly in Sage50).
- The sale of a vehicle with finance, which is to be paid by a finance company to show the vehicle as being fully paid in DragonDMS.
Here are the steps to follow:
1. Add the payment that you received from the finance company – in this example £18,500.00 using your normal BACS payment method. This will post to your nominated bank nominal in Sage50 to be reconciled.
2. This will leave £4,000.00 outstanding, to resolve this you need to add a second payment for this contra amount using a new payment method that you setup – possibly called Contra Payment. We would suggest that this posts to a dummy Finance Contra bank account in Sage.
3. In Sage, mark the Purchase invoice for the outstanding finance (£4000) on the PX as paid, using the dummy Finance Contra bank account.
Setting up a new Payment Type and Bank Nominal Code
First you need to setup the new bank nominal code. Go to Settings > Accounts > Nominal Code and click New Nominal Code
Set the Category as Current Assets, the department as Sage and ensure that the Description includes the work bank.
Once the bank nominal has been added, the new payment type can now be setup. Go to Settings > System > Payments. Click the ‘New Payment Type’ button to add the new Payment Type – see the example below:
