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Level 1

How to record Invoice factoring Transactions in Quickbooks online?

We are a trucking company and we have created invoices for our customers (brokers) and we are billing  through a factoring company to get paid sooner.

For example,  we have a batch of 6 invoices from 6 different brokers, in amount of $16,600.

The factoring company is taking 2.00% for factoring fees ($330.34 for this example) ,2% for escrow deposit ($333.66) , wire transfer fee $18, so we are receiving an advance in amount of $15,918. 

The escrow deposit is released as soon as the brokers are paying and go in a escrow deposit "account" which we can release anytime we need.

I know that the amount of $15,918 is a LOAN, and i shouldn't apply these funds to accounts receivable.

First of all what accounts I should set up? How should I record these transactions?

Please any help would be greatly appreciated.

 

 

Solved
Best answer 07-24-2018

Best Answers
Highlighted
Level 15

How to record Invoice factoring Transactions in Quickbooks online?

@acc6207

 

Thanks for the details, all too many people do not include them

Whether the payment is a loan or not, depends on your factor agreement. If an invoice is unpaid, but you have been paid by the factor company - do you have to return the amount paid for that invoice? IF so then yes it is loan, it not then it is a payment

 

Assuming you do not have to return the amount paid for an uncollectable invoice ...

 

create a non inventory item called factor fee and select the factor fee expense account on the item screen
create a non inventory item called wire exp and select the wire or bank fee expense account on the item screen

 

When you sell the invoices to the factor company
create a credit memo using the factor fee and wire exp items, and enter the amounts
apply the CM to the invoices

 

You may have to split this up across several customers, depending how the invoices are listed

 

then you receive payment against the invoices which were factored and deposit

the invoices will remain open for the amount of escrow that was held back. When you release the escrow funds to your company, receive that final payment against the open invocies

 

 

View solution in original post

4 Comments
Highlighted
Level 1

How to record Invoice factoring Transactions in Quickbooks online?

Were you able to figure out how to record these transactions?

Highlighted
Level 1

How to record Invoice factoring Transactions in Quickbooks online?

Highlighted
Level 15

How to record Invoice factoring Transactions in Quickbooks online?

@acc6207

 

Thanks for the details, all too many people do not include them

Whether the payment is a loan or not, depends on your factor agreement. If an invoice is unpaid, but you have been paid by the factor company - do you have to return the amount paid for that invoice? IF so then yes it is loan, it not then it is a payment

 

Assuming you do not have to return the amount paid for an uncollectable invoice ...

 

create a non inventory item called factor fee and select the factor fee expense account on the item screen
create a non inventory item called wire exp and select the wire or bank fee expense account on the item screen

 

When you sell the invoices to the factor company
create a credit memo using the factor fee and wire exp items, and enter the amounts
apply the CM to the invoices

 

You may have to split this up across several customers, depending how the invoices are listed

 

then you receive payment against the invoices which were factored and deposit

the invoices will remain open for the amount of escrow that was held back. When you release the escrow funds to your company, receive that final payment against the open invocies

 

 

View solution in original post

Highlighted
Level 1

How to record Invoice factoring Transactions in Quickbooks online?

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