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NightfallExpress
NightfallExpress
December 4, 2024
Question

Matching QB Checking with Factored Invoices

  • December 4, 2024
  • 1 reply
  • 0 views

I am looking on some guidance on how to match my books. I use a factoring company for my invoices. Once a week I send them my invoices, and they pay me the next day for the total of the invoices minus a percentage for factoring fee, and an ACH fee. My business checking is Quickbooks Checking so it automatically records the deposit from the factoring company. The issue I have is when I use that deposit to mark my invoices paid there is not enough to cover the total of the invoices because of the factoring fees and it make is look like the customer underpaid.

 

Thanks in advance for any guidance

1 reply

JaeAnnC
JaeAnnC
December 4, 2024

I've got some tips on how to match your deposits to factored invoices in QuickBooks Online (QBO), @NightfallExpress.

 

If you haven't yet, create a service item for the factoring fee and assign it to the appropriate expense account.

 

First, you can edit the invoice and include the factoring fee as a line item indicated with a negative sign so that it will be deducted from the total amount. This way, it will match the amount paid by the customer.

 

Here's how:

 

  1. Go to Sales and select Invoices.
  2. Click Edit on the invoice to edit.
  3. In the next blank line item, select the factoring fee you created and enter a negative sign (-) before the amount.
  4. Click Save and Close.

 

Alternatively, you can create a credit memo. and apply it to the invoice. Doing so reduces its balance by the amount of the factoring fee.

 

Once done, match the deposit to the invoice to mark it as paid.

 

Additionally, we recommend performing monthly account reconciliations to ensure they correspond to your bank statements.

Furthermore, you'll be happy to know that we have a team of dedicated experts who can provide assistance managing your sales in QBO. Visit this link for further information: QuickBooks Live Assisted.

 

Remember, the Community is open around the clock to address your queries concerning matching transactions. Just revisit us in this thread, and we'll be there right away to respond. Stay safe, and have a great day ahead.

NightfallExpress
NightfallExpressAuthor
December 5, 2024

Unfortunately creating a discount or credit on the invoice does not work in my circumstance. The invoice needs to show the full balance due because the factoring company uses that to send to my customer. So the invoice needs to show the full amount so that the factoring company is paid the full amount. Any other ideas?

R
Rea_M
December 5, 2024

Thank you for revisiting the thread, NightfallExpress. I completely understand how crucial it is for your entries in QuickBooks to align with your actual transactions. To help you maintain the accuracy of your financial data, I’d like to suggest an alternative method for recording your factored invoices. This will ensure that everything matches up with your QuickBooks Checking account.

 

Another option for you is to deduct the factoring fee at the time of depositing the invoice payment. This approach allows you to align it with the entry in your QuickBooks Checking account, while still reflecting the full balance due in your sales transaction.

 

Let's begin by receiving the full invoice payment amount. To do this, follow these steps:

 

  1. Go to the Sales menu and select Invoices.
  2. Find the unpaid invoice and select Receive payment under the Action column.
  3. In the Deposit to field, ensure it indicates the Undeposited funds account.
  4. Under the Payment column, enter the amount your customer paid. 
  5. Select Save or Save and close.

 

Now it’s time to record your bank deposits! We’ll need to include the factoring fee in the Add funds to this deposit section. To indicate that this fee will be deducted from the original payment, simply add a negative sign (-) before the amount. Here’s a step-by-step guide to help you through the process:

 

  1. Go to the + New button and select Bank deposit.
  2. From the Account dropdown, choose your QuickBooks Checking account.
  3. Select the checkbox for the payment you want to deposit.
  4. Scroll down to the Add funds to this deposit section to enter the negative figure of the factoring fee. 
  5. Make sure the total of the selected transactions matches your downloaded transaction.
  6. Click Save and close.

 

Once you're done, go to the Bank transactions tab from the Transactions menu to match the deposit to the downloaded entry in your QuickBooks Checking account.

 

Additionally, I highly recommend reconciling your accounts each month. Building this habit will give you better insight into your finances and help you manage them more effectively.

 

If you have any further inquiries or would like to elaborate more details about recording factoring invoices, I'm just a message away in the Community. I'll be here to assist you continuously. Best wishes!

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