I recently started working for a clothing wholesaler who uses a factor for their AR. Does anyone here have experience with using a factor company? My company works with QuickBooks and since factoring is new to me, I'm not feeling sure about entering transactions. Thanks for any information you can provide!
USA Factoring AR
- Thread starter Wallis002
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smallbushelp
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Not sure how you are doing with this but I thought I would add my 3 cents worth for future viewers. Factoring involves the sale of your receivables to a third party who then assumes the duties of collecting the receivables and charges you a fee. At the most basic level then, the journal entry for the sale of the receivables would look like this:
Cash $ 8,000 DB
Factor fee (expense) $ 2,000 DB
Accounts receivable $10,000 CR
However, factoring can involve recourse and non-recourse arrangements, a percentage of cash upfront with the balance paid when all receivables are collected, and invoice buybacks. So if you need more input, please advise.
Cash $ 8,000 DB
Factor fee (expense) $ 2,000 DB
Accounts receivable $10,000 CR
However, factoring can involve recourse and non-recourse arrangements, a percentage of cash upfront with the balance paid when all receivables are collected, and invoice buybacks. So if you need more input, please advise.