USA Forwarding Payments Entries

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Hi All,

The company I work for recently started factoring invoices.

Some of our customers have sent us payments that need to be forwarded.

What is the best way to record these entries? I can deposit to and transfer from undeposited funds but I would like to keep a better papertrail. Would you suggest setting up an A/P subaccount? When the funds are received I could credit the sub and debit once we forward payment to factoring company.

Thanks,

Shawn
 

smallbushelp

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If you can't just forwarded the payment checks as is, then yes, you should deposit them into your company's account and issue a check to the factoring company but I don't recommend using the undeposited funds account. And it's not really an AP situation either. What you have is a short term or current liability. Deposit the checks into your bank account a credit an account like "factor payments payable." Then when you write the check to the factoring company, you debit the same account.
 

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