You need to ensure that Income, Expenses and any GST are recorded correctly and BAS returns are updated correctly where you have Customers and Suppliers who are the same entity and you want to net off amounts paid on one account against the other.
Follow the below steps:
Enter a Customer Invoice as normal for Products, Services or Sundry items you have provided.
Enter a Supplier Invoice as per normal for Products, Services or Sundry items you have received.
Set up and use a Contra Payment Bank Account.
Enter Customer Payment for the amount to be offset and select your Contra Payment Bank Account In the General Ledger area of the payment window.
Enter a Supplier Manual Payment for the same amount as the customer payment.
Select Override GL Bank Account and Set the G/L Bank Account to your Contra Payment Bank Account.
Depending on which was the larger amount Customer Balance or Supplier Balance you will end up with a Balance that is either Payable to the Supplier or Receivable from the Customer. Apply payments for the Balance or Net amount of the invoices from your normal bank account as you normally would for Customers and Suppliers.