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C
Conchita
October 31, 2023
Question

Finance Company Fees

  • October 31, 2023
  • 1 reply
  • 0 views

Our company works with a finance company to helps customers pay for our products. Before funding us, they take 12%. Is that something I need to put on the invoice to reduce the amount due so it matches what has been funded to us?  I'm unsure how to account for this or how to categorize this. 

1 reply

BigRedConsulting
BigRedConsulting
November 27, 2023

Factoring in this way doesn't reduce the sale, but is like a discount/charge you pay when you accept a credit card.

 

So, probably the best method is to add a discount with the payment that pays the invoice.

 

For example, if the invoice is $100, then record the payment from the finance company of $88 and add a discount of $12, which together will pay down the invoice open balance to $0.

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