Currently using a factoring company and trying to track the information in QuickBooks?
Thinking about factoring some of your accounts, but not sure how to do it in QuickBooks?
FACTORED RECEIVABLES MAY MAKE SENSE...
Factoring is a great solution for business owners to get working capital to operate their business efficiently and with the peace of mind of knowing they’ll get paid.
For example, let’s say you manufacture furniture and sell to retail customers. A customer places an order for ten sofas. Consequently, you determine the customer is credit-worthy, order raw materials, manufacture, ship, and send an invoice. Now, you need more cash to buy raw materials and pay employees to manufacture more furniture.
But there’s a big potential problem. While you give the customer Net 30 days to pay the invoice, the customer might pay within 45, 60, 90 days or doesn’t pay. However, you need the cash to restock inventory and pay vendors. This is where a factor helps.
SOUNDS GREAT – NOW WHAT?
Beware when your CPA, internal bookkeeper/accountant, or another “trusted advisor” provides this information: “QuickBooks wasn’t designed for factoring accounts receivables.”
The accounting for non-recourse factored accounts receivables isn’t as complicated or cumbersome as CPAs, internal accountants/bookkeepers and “trusted advisors” make it to be! And, if not set up and used properly, you have a big mess.
LEARN MORE ABOUT FACTORING
I've partnered with Ron Downs, an expert in the field of non-recourse factoring to put together a brief guide that: discusses the benefits of factoring, lists some of the problems that factoring can solve, provides a few thoughts on how QuickBooks may fit in, and gives an introduction to our consulting services.