Advice 1: Why the need for reconciliation

The account of calculations with creditors and debtors is one of the key directions in the work of the accounting Department of any organization. The act of reconciliation of mutual settlements is a primary accounting document used by the contractors to monitor the performance of mutual obligations. It is made in the form of registry that contains all the operations for the shipment of goods, rendering of works and services and their payment for a certain period of time.
Why the need for reconciliation

The form of the act is not enshrined in law, therefore every company is in compliance with all the requirements for registration of primary documents requirements, has the right to develop its own version of the act. The document, compiled by one of the parties to the Treaty in two copies and signed by an authorised person, is sent to the counterparty, which, in the case of the consent with correct mutual settlements, confirms his signature and sends one copy back.

If there is a discrepancy, the counterparty has the right to sign the act, pointing out inaccuracies in the account, or attach to a document registry own calculations. The refusal of signing the act means that the debtor does not recognize the existence of obligations to the counterparty.

The act of reconciliation of mutual settlements are strongly advised to leave in cases where the parties cooperate on a regular basis and plan in the future to renew existing contracts and enter into additional agreements to them. This document is also needed in situations where the cost of goods, works or services is high, and the seller provides deferred payment.

If the parties to the agreement have towards one another are mutual obligations, then, reaching for their confirmation act of reconciliation, they can produce their offsets. In addition, the presence of a registry of mutual obligations will save time searching for primary documents if necessary to clarify the payments between counterparties. The signed acts of reconciliation are also confirmation of balances of receivables and payables at the end of the reporting and the beginning of the next period in the preparation of financial statements.

Despite the fact that the act of reconciliation cannot be used in court as evidence of the transaction and the existence of debt on it, it can be used to extend the limitation period and to increase the chances of collecting receivables. Having signed the reconciliation act, actually means the recognition by a counterparty of its debt, the lender increases the term during which he may present to the debtor a claim for the payment of money. In this case it is important to check whether the authority of the person whose signature is on the document.

Advice 2: How to make the act of offsetting

The act of netting is made in the case of the agreement on repayment of mutual debts between economic entities. Often such transactions are carried out in order to preserve working capital, reducing the tax base.
How to make the act of offsetting
The act of offsetting is the primary design document. From the correctness of its design depends on the absence of errors in accounting and tax accounting for such operations. The unified form of the document does not exist, but it should meet all the requirements for primary documents.
Conducting netting is carried out in 2 stages. The first is the identification of the debt. The act of reconciliation, which reflects transactions between organizations. Second - make and sign the act of netting, where it is stated which the amount owed is repaid. The second stage ends with a direction of the notification in unilateral netting or the signing of the act - in two-way.
Specify in the act the amount of obligations for each item of the contract netting. The total amount of debt reflected in the overall result. VAT is mentioned separately for each item of debt and at the end of the total. The figure specified in the act must be confirmed by the documents: invoice - factures, invoices, etc.
Be sure to register the date of the act, the basis of the requirements specified in the act (Treaty, agreement), and the timing of their execution. In the act there should be a phrase that specified the amount of mutual debts are extinguished. This document is signed by the head of organization or authorized representative by proxy.
The contract offsetting is only in the case of expiration of time for payment under the main contract. The offsetting obligation can be performed only in the case that execution time it has already arrived, is not specified in the contract.
Useful advice
It is impossible to offset in the event of requirements about compensation of harm of life and health, alimony, annuity, and in other cases. In order to offset optional that the sum of mutual claims were equal, according to article 401 of the civil code may partial satisfaction of the requirements.
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