Skip to main content
H
HSS2019
October 21, 2019
Question

Invoice Factoring

  • October 21, 2019
  • 1 reply
  • 0 views

Hi, 

 

We use Factoring for a couple of our Client invoices. 

 

I would be grateful if someone could advise:

 

  • How to record payments against Client invoice
  • How to record advance payments to us from the factoring company
  • How to record fees charged by the finance company

There is very little clear walkthroughs online and QBO techies cant seem to assist! 

 

Thanks, 

 

1 reply

A
Anonymous
October 29, 2019

We have discussed this in the past - so a deep search will show lots of info.  There is more than 1 way to account for AR factoring and arrangements with the funders may vary.  I have done it this way:

  • Establish a "FactorBank" account in QB.
  • ALL the cash flow transactions between your company's 'normal bank account' and Factor get posted to that 'FactorBank" account.
  • All the Factored Customer Payments are also posted as deposited to the FactorBank.  Review the Factors statement to find these.
  • When you get statements from the Factor record all the commission/discount charges as a "Vendor Bill" from the factor.  Then pay that bill from the "FactorBank" account.

Doing it this way uses a minimum of steps and is pretty clean - except that the FactorBank balance will normally be negative because you will actually owe them money. This is just a presentation problem - the underlying accounting is still correct.

Terms & ConditionsAccessibility statement