Dealing with Factoring
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Revision as of 15:07, 4 September 2008 by Tim Laundon (talk | contribs) (New page: {{Incomplete}} ==Summary== Factoring is a process whereby you invoice a customer the full amount for a vehicle and also send a copy of that invoice to a relevant Finance Company (Factorin...)
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Summary
Factoring is a process whereby you invoice a customer the full amount for a vehicle and also send a copy of that invoice to a relevant Finance Company (Factoring Company). That Factoring Company in return send you, on average, 85% of the total amount of that invoice the next business day. The customer then has an obligation to pay the Factoring Company the full amount stated on the invoice.
The following outlines how this process is achieved with Platinum Accounts.
Details
The first thing you need to do is to create a Nominal Code for the Factoring Company.
- Get into "Nominal Ledger" -> "Maintenance Options" -> "Centre Maintenance" -> "Insert/Amend/Delete Centres" and create a new centre in and around currently setup Control Accounts. (eg. 19700 onwards in the current Platinum Nominal structure) and call this "Factoring Control Account" and set is as a Current Asset on the Balance Sheet.
- Also, setup a Nominal Code for "Factoring Charges" in and around the section in the Nominal for other charges (15300 onwards in the current Platinum Nominal structure)
- Pay off the customers invoice to the Factoring Control Account. This clears them as a debtor to you.
- When the payment arrives from the Factoring Company, credit the Factoring Control Account, and Debit the Bank Account.
- For any Factoring Charges, Credit the Bank Account and Debit the Factoring Charges Centre.
