Question

How do I reconcile a merchant cash advance?

Forum|Forum|5 years ago
November 22, 2020
3 replies
0 views

My company is using QuickBooks online for our trucking company. We have taken out several merchant cash advances this year. I know I cannot show them as loans, but I cannot figure out how to both show them and show the payments made to them. I have searched all through the help items in QuickBooks but the only thing that keeps showing up is how to do an employee cash advance. Can someone give me a simple explanation of how to do this (simple because I am not an accountant lol)?

QuickBooks Online

C

Catherine_B

Hi there, LAZY641.

You can record your merchant cash advance as a retainer. We'll have to create a liability account and a liability item. For more details, you can click this page and refer to the Pay customer expenses with money held in the liability account section: Record a retainer or deposit.

If you need more help you can always mention me in your reply. Take care!

L

LAZY641Author

I read over the procedures for creating a liability item to record a retainer or deposit, but it still leave me with questions. How does using that account for the extra amount that I have to pay them back, plus the fees that are tax deductable? For example with one of the MCAs they gave me $20792 and they take back $31050. They also deducted almost $1900 in various fees from the amount they initially advanced to me. Additionally the help item talks about deducting money from the liability account using invoices or sales receipts. The MCAs automatically deduct a set amount from my account each business day. In the example I used about they deduct $297 a day. There is no receipt or invoice for it. How do I record this?

A

AileneA

Hi there, LAZY641.

Let me share some information about the retainer account in QuickBooks Online. This method of creating retainer account will temporarily holds the money on the Balance Sheet in a separate deposits received other current liability account. You can easily see all the money that is being held. Double-click on the Deposits Received liability account on the Balance Sheet report.

Then, when setting up this new Service be certain to use the new Liability Account as the Income account. This way, when using this Service on an Invoice or Sales Receipt, the money will be held in this Account on the Balance Sheet.

You can read through this article about how the workflow of recording retainer or deposit account in QuickBooks: Record a retainer or deposit.

I also recommend you to consult an accountant. This way, they can offer you some advice on the correct accounts to use. If you don't have any, I encourage checking out this link to find one: https://quickbooks.intuit.com/find-an-accountant/.

Drop a comment below if you have additional questions in managing your account in QuickBooks. Doing so helps us to assist you further. Have a great day!

G

Garcia96

I too have the same question as well. If I found it out then I'll let you know Target EHR

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Trucking Company12

I also have trucking company and have the same question. How to I create and account and record a the payments if this is considered merchant cash advance? My bank also does not consider this a loan, so therefore they do not consider the fees interest? My accountant said not to record as retainer. Can someone please help!

Angelyn_T

I appreciate you for joining the thread, @Trucking Company12.

One option is to record the transaction as a deposit as suggested above. If you don't want to record it that way, I suggest seeking help from a professional accountant. This way, they can help you select the account and record the amount accordingly.

For more tips, while processing credit cards and eChecks in the Merchant Service Center, you can check out this link: Process payments in the Merchant Service Center.

If you have any other questions, please let me know in the comment section below. I'm always here to answer them. Take care and enjoy the rest of the day!

Regina_Lend_A_Hand_Accounting

When a business leverages their Accounts Receivable asset to obtain a loan, the loan deposit is recorded as a short-term liability on the Balance Sheet. The principal payments are applied to reduce the loan liability balance. The loan fees and interest fees are recorded on the Profit and Loss report as an expense. There is no need to use an Entity to record this transaction unless the originating deposit and loan payments are not coming through the connected bank feed in QuickBooks Online. When the payments come through the connected bank feed you can split the transaction to record the expense and principal amounts. If either side of the transaction does not come through the connected bank feed, you can journal it into the books accordingly.

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