![]() Leaving the 20% on the Factoring bank account as a debtor. When the 80% was received I would pay off the full 100% amount of the factored invoice on the sales ledger as being paid into the factoring bank account and then transfer the 80% from the factoring bank account to the bank account matching the 80% received. I set up a separate bank account for the factoring company to process transactions through. the client would then send a copy of the invoice to the Factoring company for an 80% payment against the debt. I use Sage and the client invoiced their customer gross and this would be posted to the sales ledger. I have had a small experience with this and it can be a bit trikky. If they are cash accounting for VAT then you declare the VAT on the amount the customer pays, not the amount released by the factors. This would make it just like a paypal account.Īlternatively, some companies will send through 70% straight away, the balance when the customer pays, and then deduct their fees from the 'holding account' and send an invoice. If the factoring company pay less, they may be deducting their fees at source per invoice. In my experience, the gross value of the invoice is as it is. My question is, would I be correct by putting through the original amount on the invoice and putting vat through as that amount.Īlso I have a balance left over from the difference from the original amounts to the amount the factoring company has put the invoice on as. Does anyone on here have experience of factoring companies?, it is just that I have a client who uses a factoring company and when the factoring company sends through remittances, they have a lower amount as the invoice value then what the original invoice has on it.
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