One Company Pays Anothers Debts

Keeping your books accurate is my priority here. I have a way how to set up your factory invoices in QuickBooks Online (QBO), @FTFTowing.

Let's create two accounts for your factory transactions. One is a Liability for the invoice and an Expense for the fee for broker. Let me show you how: 

1. Go to the Accounting tab and choose Chart of Accounts.
2. Click the New tab.
3. In the Account Type drop-down, pick Other Current Liabilities.
4. In the Tax form section, select the detail type that best fits the transactions you want to track.
5. Type a unique name in the box, then click Save and close.
6. Repeat the steps for expenses.

See this article for more details: Add an account to your chart of accounts in QuickBooks.

Afterward, generate an invoice in the usual way and transfer the funds to the newly created liability account.

Here's how:

1. Go to the Plus icon and select Bank deposit.
2. Choose the account you want to put the money into from the Account drop-down.
3. Go to the Add fund to this deposit section, then select the liability you created in the Account box.
4. Enter the Amount.
5. In the second line, add the expense account and the fee amount with a negative sign.
6. Click Save and close when done.

For complete steps, see this article: Record and make bank deposits in QuickBooks.

Since the customer has paid the factoring company, you'll need to receive the funds manually. Follow the steps below: 

1. Go to the +New icon and pick Received Payment.
2. Select the customer name in the field.
3. Choose Undeposited Funds in the Deposit To box.
4. Complete the necessary information, then click Save and close.

After that, let's go back to the bank deposit page to finish the process. Do the following: 

1. Choose the transaction you just recorded in the list.
2. Under the Add funds to this Deposit, pick your liability account.
3. Record the dollar amount of the invoice as a negative number. This will create a net-zero deposit that records the loan as paid off.
4. Click Save and close.

On top of that, If you need help with the accounts, I suggest checking with your accountant for further assistance.

Additionally, I recommend taking a look at the following articles that will provide you with guidance on managing your chart of accounts and reconciling them in QuickBooks:

• Reconcile an account in QBO
• Learn about the chart of accounts in QuickBooks 

If you require any assistance with invoicing in QuickBooks, please don't hesitate to let me know by responding to this message. As your dedicated support agent, my goal is to help you with anything related to the program to ensure seamless and efficient operations. Stay safe!

@FTFTowing 

Does the factoring company have recourse?  In other words, can they force you to buy the invoice back if your customer doesn't pay the factoring company?