Factored Invoices

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14.16.1 Overview

The following methods of handling factored invoices assumes:

You know you are going to sell the invoice to the factoring company before you create the invoice.

The invoice contains a remit to address to the factoring company. The remit to address could be rubber stamped onto pc/MRP's standard invoice or you could use pc/MRP's custom report writer to create a custom invoice named cinvoice.frx. that would contain the remit to address in the note section of the custom invoice.

The invoice for the full AMOUNT is sent to the customer and factoring company.

The factoring company sends a check for a portion of the invoice.

The customer sends a check for the full amount to the factoring company.

The factoring company notifies you that the invoice has been paid.

14.16.2 A simple method for handling factored invoices:

Enter the invoice for the full AMOUNT, print several copies, and send them to the customer and factoring company.

Edit the invoice, put the factoring % in the discount field. Reprint the invoice for your own copy showing the total amount and the discounted amount.

Enter an O type accounting transaction to register the accounts receivable invoice debiting AR and crediting business income for the reduced AMOUNT.

When you receive the check for the reduced AMOUNT from the factoring company, enter an R type accounting transaction. pc/MRP will credit AR and debit the checking account for the reduced amount automatically.

14.16.3 A more sophisticated method for handling factored invoices:

Enter the invoice for the full AMOUNT, print several copies, and send them to the customer and factoring company.

Enter an O type accounting transaction to register the accounts receivable invoice debiting AR and crediting business income for the full AMOUNT.

When you receive the check for the reduced AMOUNT from the factoring company, enter an A type accounting transaction. Credit invoice factor liability and debit checking for the reduced amount.

When you receive notification from the factoring company, that the customer has paid the invoice. Enter an R type transaction for the invoice debit invoice factor liability, debit invoice factor expense, and credit AR for the full AMOUNT of the invoice. You could open pc/MRP's or Window's calculator to subtract the reduced payment AMOUNT from the full AMOUNT to calculate and then paste in the expense AMOUNT.