Accounts Receivable Sold

OrionGal · ‎November 22, 2022

Hi everyone -

I need a little explanation on why I would use the Accounts Receivable: Accounts Receivable Sold...

I though it was a loan...

After reading the agreement, its not... My COO signed this agreement as a Sale of A/R.

How do I JE this under the AR Sold Account?

When I run the A/R Aging, it shows as a negative $150,000.

I just took over this new position and the previous controller entered like this... see picture:

$ 120,000. Purchase Price (What we got for it before fees)

$ 150,000. Amount Sold (A/R Sold)

$ 2,900. Processing Fees

$117,100. Funded Amount

Thank you in advance!! I have a headache trying to figure this out for almost a whole day!!

Thanks everyone!!

Shafiqch · ‎March 25, 2023

You can read more about factoring accounting to account for AR sold, Charges and funding.

Rainflurry · ‎March 26, 2023

@OrionGal

I assume that the previous controller used A/R Sold out of convenience. So, instead of creating individual A/R credits for each customer and then applying them to close out the invoices, it was quick and easy to create a journal entry with a lump sum credit to A/R. The problem, as you're finding out, is that using a journal entry (J/E) to record the sale of the receivables does not close them out. Now, they're all sitting open in your A/R Aging Report.

Is the $150K in invoices sold still showing open in your A/R Aging report too? Give me an idea of how many customers/invoices we're talking about and I can assist further in getting them closed.

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