Factoring


Y

yojerkyboy

I run a small company and I just started using a factoring company. Does
anyone
know how to properly account for the factoring payments? I am using cash
basis
accounting.

Thanks
 
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Y

yojerkyboy

The factoring company holds 10% in reserve for 30 days and takes a 1%
fee for every 15 days that the invoice is outstanding.
 
A

Allan Martin

yojerkyboy said:
I run a small company and I just started using a factoring company. Does
anyone
know how to properly account for the factoring payments? I am using cash
basis
accounting.
I do.
 
A

Allan Martin

yojerkyboy said:
Does anyone who is not a troll have an answer?
I remember back in the day I asked a beautiful young lady if "I can make
love to her?". She said "I believe so", then she walked away and I never saw
her again.
 
Q

QBConsultant

I remember back in the day I asked a beautiful young lady if "I can make
love to her?". She said "I believe so", then she walked away and I never saw
her again.







- Show quoted text -
Since you're cash basis:

Debit Cash 90
Debit Factoring expense 10
Credit sales (or income) 100

The real sale/invoice may have been 125 dollars, but since you're cash
basis only recognize the revenue you received. Whatever they collect
is the revenue/income. Then you break in down between how much they
keep as their fees (expense it) and you deposit the rest into your
checking account. Make sense?

Michelle L. Long, CPA, MBA
Author of: Successful QuickBooks Consulting: The Complete Guide to
Starting and Growing a QuickBooks Consulting Business
http://www.SuccessfulQuickBooksConsulting.com
http://www.amazon.com/Successful-QuickBooks-Consulting-Comprehensive-...
Advanced Certified QuickBooks ProAdvisor
Member of Intuit's Certified Trainer Network
 
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A

Allan Martin

I remember back in the day I asked a beautiful young lady if "I can make
love to her?". She said "I believe so", then she walked away and I never
saw
her again.







- Show quoted text -
Since you're cash basis:

Debit Cash 90
Debit Factoring expense 10
Credit sales (or income) 100

The real sale/invoice may have been 125 dollars, but since you're cash
basis only recognize the revenue you received. Whatever they collect
is the revenue/income. Then you break in down between how much they
keep as their fees (expense it) and you deposit the rest into your
checking account. Make sense?


If the OP had asked how to account for factoring instead of if anyone knows
how, the first thing I would ask the OP is to walk us through each step of
the process before shooting from the hip.




Michelle L. Long, CPA, MBA
Author of: Successful QuickBooks Consulting: The Complete Guide to
Starting and Growing a QuickBooks Consulting Business
http://www.SuccessfulQuickBooksConsulting.com
http://www.amazon.com/Successful-QuickBooks-Consulting-Comprehensive-...
Advanced Certified QuickBooks ProAdvisor
Member of Intuit's Certified Trainer Network
 
M

Macy

I think this can be a little more complicated than you have posted.
More information is needed from the OP. Who does the customer pay,
the seller or the factor? Do open invoices over 90 days go back to the
seller. Who does the collection effort?

Macy
 
T

TonyK

I run a small company and I just started using a factoring company. �Does
anyone
know how to properly account for the factoring payments? �I am using cash
basis
accounting.

Thanks
Hopefully the discussion below is helpful.

If you are interested, I use a funding company that is not a factor,
but advances funds in a similar fashion. The benefit is that their
rates are low (2.18 - 5%), and I keep ownership of my invoices. I'm
not shilling for them, so if you're interested, send me a note & I
will get you their info.

I have a pretty tortured method of posting everything, but if the
other suggestons do not work, feel free to let me know.

Goog luck!
Tony
 
Y

yojerkyboy

Sorry that I was slow to repond. Thank you for the breakdown Michelle, it
makes total sense!
 
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G

Gil Faver

Allan Martin said:
I remember back in the day I asked a beautiful young lady if "I can make
love to her?". She said "I believe so", then she walked away and I never
saw her again.
and you still have the same effect on people.
 
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