We are a newly operational logistics company and we have an arrangement with one of our customers at our warehouse. The customer is a freight forwarding company, and has employees at our warehouse.

The employees are on the payroll of our customer, but as per the arrangement, their salary expense will be borne by us. We have to pay the payroll amount to the customer at the end of each month.

As receivables, we invoice the customer once a month for all the services provided by us. The transactions only happen once a month, where we give one single invoice, and we are to pay them for the payroll expense.

So far, no money has been exchanged, and we are still trying to figure out how to build a mechanism around this. We are required to pay the payroll of these employees, and if we can't do offset, the customer does not want this money via bank transfer, rather only cash. To avoid showing it as income.

We have also taken over some assets from the customer's other warehouse at a lumpsum cost and installed it at our warehouse.

So we have two liabilities, one is the fixed assets, other is the monthly payroll of the warehouse employees.

My question is,

1) Can we offset the fixed assets against our monthly receivables (invoices)? The customer has agreed that we pay this in smaller monthly instalments with an initial moratorium of six months. If yes, what new accounts do we need to create and how will the journal entry for it be?

2) a) how can we offset the payroll payment against our receivables? After adjustment of payroll and receivables, we have a net positive balance. The customer is supposed to pay us, since the receivables are of a higher amount than the payroll expense.
b) what options do we have if the customer insists on a cash payment?