Factoring a Bill

[Andres Stickar]

Thanks Eric for the help.
You are write, English is not my native language. Sorry about that.

I have now a new question. If I sold my receivable I will have the original
Bill for 100 and the new one for 91.
In the balance I will have bills for $ 191, but this is not true.
Or maybe you said something different and i didn't understand.
Thanks

A.



On Thu, Jun 23, 2011 at 6:38 PM, Eric Morey <eric at glodime.com> wrote:

> On Thu, 2011-06-23 at 16:47 -0400, Andres Stickar wrote:
> > In the normal operation, I bill a client and enter the bill in the system
> > with a due date to 30 days.
> > But in the real world, if I need the money before the due date, I can
> > negotiate it in a factoring enterprise or a Bank.\
>
> I use to work for the largest factoring company in the USA and have a
> bit of experience with this type of financing. I know enough to know
> that unless the factorer is providing accounts receivable and credit
> analysis services for your company, there are often cheaper forms of
> financing available for merchants. But this is not what you asked
> about.
>
> > I release the bill to an enterprise or  Bank who give my the money today
> ,
> > but not all, and wait to the due date (30 days)
>
> I'm not sure if english is your native language and you improperly typed
> your sentence or if something is lost in translation, but the meaning of
> your statement is unclear.
>
> > After 30 days they receive the all amount of the original bill.
> > Now the problem. How can I register this.
>
> First, talk to an accountant. How you book this transaction probably
> depends on whether this is a true factoring deal or an asset based loan.
> If it's a factoring deal you sold your account(s) receivable asset
> (probably for less than the original receivable). So you would credit
> A/R: customer x, Debit Cash and some Expense Account (maybe Receivables
> Factoring Expense):
>
> Cash                            91
> Receivables Factoring Expense    9
>        A/R: Customer x                 100
>
>
> I hope this helps.
>
> Eric...
>
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