Institute of Certified Bookkeepers
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AddCash Debtor Invoice Finance

  • Member in Practice
  • Practice Certificate
  • 13 posts
  • # 116890

Hi there,

First time I have come accross this.  AddCash Debtor Invoice Finance - trying to wrap my head around it as I need to know how to bookkeep for it.  Sorry EOFY head atm.  A bit like an overdraft? Assuming that deposits received are bulk income from AddCash.  Payments to AddCash are to pay for any fees incurred.  Client sends all invoices to AddCash, who proceeds to funds those new invoices, rather than awaiting payment from customer, AddCash receiveds funds instead with client using their bank details for payment? Do I just use this as a form of clearing account, but as a liability account?  Would greatly appreciate any help, advice etc.  Many thanks.



Edited at 30 Jun 2018 05:38 AM GMT

  • Fellow in Practice
  • Practice Certificate
  • 151 posts
  • # 117027

Hi Mandi,

 

This is Debtor Invoice financing or Facatoring.  

There are different ways of handling this depending on the arrangement Client has with the Financer.

Note that the Customer invoice should not be 'closed' until the Customer actually pays, otherwise you will lose control of your Debtor management.  The factoring is like 'finance/loan'.

In your accounting software (you haven't mentioned what you're using) you'll need a Factoring Account (suggest CC type) and a Factoring charges expense account.

The Factoring Account should be reconciled like a bank/credit card account.

Depending on what software you use, you may actually be able to access a "how to do". 

Let us know how you go.

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