Factoring a Bill

Eric Morey eric at glodime.com
Thu Jun 23 22:49:47 EDT 2011


Again, you should talk to an accountant and show him your factoring
contract. This could all be terribly wrong or inadequate.

On Thu, Jun 23, 2011 at 6:38 PM, jldugger at gmail.com
<jldugger at gmail.com>wrote:
> >
> > I think you would take the bill in accounts recievable and make an
> > offsetting transaction, splitting off the advance to your cash
> > accounts, the reserve to a separate account, and the fees to an
> > expense account. Does this sound wrong?
> >

This is a simpler description than I came up with. It explains the part
that I believe Andres was asking about but I didn't understand.

On Thu, 2011-06-23 at 21:22 -0400, Andres Stickar wrote:
> 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.
> 

Once you sell your receivable it is legally not yours, you need to take
it off of your books by recording a countering transaction.

Expanding on my original sample transaction to account for the reserve:
Dr:
Cash                            90
Receivables Factoring Expense    9
Cr:
A/R: Factoring Company		 1 (The Reserve)
        A/R: Customer x                 100 (Offsetting transaction)

Then when the reserve is paid to you:
Dr:
Cash				 1
Cr:
	A/R: Factoring Company 		  1





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