Stop Overpaying Vendors - Sharing The Righter Way

What We’re Trying to Accomplish

Some companies appear in your system as both customers and vendors. You sell to them and also buy from them. If those records remain separate, it’s easy to overlook what they owe you when processing payments.

The real purpose of linking these records is to ensure you never pay a company more than necessary if they also owe you money.

The objective is to:

Link the Customer and Vendor records that represent the same organization.
Display the other role’s balance directly on the card (for example, show the Vendor Balance on the Customer Card).
Offset or net outstanding entries through the Net Customer/Vendor Balances function in the Payment Journal.

This provides full visibility into both sides of the relationship, prevents duplicate or excessive payments, and maintains an auditable record of how balances are settled.

Where to Start the Link

If both records already exist, the most practical approach is to start from the Vendor Card.

Why start from the Vendor side:

The Net Customer/Vendor Balances feature exists within the Payment Journal, which is part of the vendor payment process.
Linking from the Vendor ensures the Customer Balance (LCY) cue appears on the Vendor Card, helpful when preparing payments.
It aligns with the real-world purpose: deciding what to pay a vendor after factoring in what they owe you as a customer.

If your workflow is AR-driven, starting from the Customer Card works equally well. The linkage created in the background is the same; only the displayed cue differs.

Creating and Linking During Setup

If you know from the start that a company will act as both Customer and Vendor, you can create and link both roles directly from the Contact record to avoid duplicates.

From a Vendor Contact

Create or open the Contact linked to the Vendor.
On the Contact page, choose Actions > Functions > Create as Customer.
Business Central automatically creates a Customer record using the same Contact and establishes the link.
The Contact Type becomes Multiple, indicating it serves more than one role.

From a Customer Contact

Open the Customer’s Contact.
Choose Home > Actions > Functions > Create as Vendor.
Business Central builds the Vendor record and links both sides.

This approach ensures a single shared Contact, correct linkage, and consistent data from day one.

Linking an Existing Customer and Vendor (After Setup)

If the company already exists in both your Customer and Vendor lists, you can link them later using the same Contact. This can be done at any time without affecting existing transactions.

Open the Vendor Card (or Customer Card).
From the action bar, go to Home > Contact > Actions > Functions > Link with existing > Customer (or Vendor if starting from a Customer Card).
Select the matching record from the list.
Confirm the connection.

Once linked:

Both entities share a single Contact record.
The initiating side will display Multiple as the Contact Type.
The opposite record will show the related balance cue (Customer Balance or Vendor Balance) in the FactBox.

This method is used when both records already exist and ensures they are properly tied together for reporting and netting.

What Happens in the FactBoxes

The side that initiates the link determines which balance cue appears in the FactBox.

Link Created From	FactBox Cue Shown	Typical Use
Customer → Vendor	Vendor Balance (LCY) on the Customer Card	Best for AR users managing customers that are also vendors.
Vendor → Customer	Customer Balance (LCY) on the Vendor Card	Best for AP users preparing vendor payments.

Behind the scenes, the connection is fully bidirectional. The cue placement is simply a user-interface choice; the data relationship is identical either way.

“Multiple” Contact Behavior

When a Contact represents both a Customer and a Vendor, Business Central labels it as Multiple, but only on the side where the second role was created.

“Multiple” means the Contact participates in more than one business relationship.
The other card still references the same Contact but may not show the label.
This visual difference doesn’t affect functionality; both records remain fully linked.

What the “Net Customer/Vendor Balances” Action Does

The Net Customer/Vendor Balances action in the Payment Journal isn’t designed to show one “net amount to pay.” Instead, it creates the settlement lines between the Customer and Vendor so both ledgers apply correctly.

Net Customer/Vendor Balances from Payment Journal

Business Central identifies all open Customer and Vendor Ledger Entries for linked partners.
It creates corresponding journal lines for each side.
You review and post these to apply entries appropriately.

The result is:

A clear, auditable record of which invoices and credits were offset.
Proper ledger application on both AR and AP sides.
Control over partial or selective netting.

Why you don’t see one net total: Business Central prioritizes accuracy and transparency. You decide which entries to apply, ensuring both ledgers remain consistent and traceable.

7. What Happens Next: Suggest Vendor Payments

After you run Net Customer/Vendor Balances, one of three things can happen:

The netting fully clears both sides. No open entries remain, so the vendor will not appear in Suggest Vendor Payments.
The vendor still has a residual balance due after netting. That remaining open Vendor Ledger Entry is treated like any other payable.
- When you later run Home > Actions > Functions > Suggest Vendor Payments, Business Central automatically includes that vendor for the outstanding amount.
- The Payment Journal line will show the remaining amount due, already reduced by what was settled through netting.
The customer side now has a balance due to you. The vendor will not be suggested for payment since there’s nothing payable; instead, you’ll collect from them as a customer.

Netting simply updates the ledger so payment suggestions reflect the true remaining balance after offsetting.

Alternative Approaches

Built-in Netting (recommended): Ledger-level accuracy, transparency, and a complete audit trail.
Manual clearing using memos or a clearing account: Useful for negotiated or one-off settlements.
External netting summarized in Business Central: Suitable for low-volume or informal relationships.

Practical Next Step

Create a vendor, then use Home > Actions > Functions > Create as Customer on its Contact.
Post one vendor invoice and one customer invoice for that company.
Run Net Customer/Vendor Balances to offset part, but not all, of the vendor’s payable.
Confirm the remaining open amount in the Vendor Ledger.
Run Home > Actions > Functions > Suggest Vendor Payments and note how Business Central picks up only the residual payable balance.

By linking records early—or even after setup—you prevent overpayment, gain immediate visibility into cross-balances, and simplify both AP and AR workflows. Business Central’s design makes netting deliberate, visible, and audit-ready, ensuring the system always reflects what’s truly owed after considering both sides of the relationship.