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Quickbooks Reconciliation

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One of our factoring clients recently asked about the proper way to reconcile QuickBooks or other accounting software when factoring invoices.

“I’ve seen references to several different solutions to this question. Which is the best way to record an invoice in QuickBooks and correctly keep track of outstanding balances and the factoring rates paid to the factoring company once the transaction is complete? I’m getting a bit confused!”

Universal Funding’s answer comes in three easy steps.

Step 1: Create an Accounts Receivable account in the COA chart of Account titled “Factored A/R”. All invoices that you submit to your factoring company for funding will need to be created out of this account. Then use the original account for non-factored invoices.

Step 2: If you are factoring with Universal Funding, check your e-Factor account to view which invoices have been paid. You will want to do this on a daily basis. In QuickBooks you will go to Customers Receive Payments and receive the payments for the factored debts but instead of applying the payment to the normal “Undeposited Funds” account, you will post to a new “Other Current Asset” account called “Due from Factor” showing that a balance is owed to you from Universal Funding.

Step 3: When you receive money from your factor, make a deposit into the checking account and choose “Due from Factor” as the From Account.

One thing to note: you must use accrual accounting for VAT if you factor debts.
If you are still experiencing QuickBook challenges, then just give Universal Funding a call and your account representative will be happy to walk you through the reconciliation process.

Give us a call at 800-405-6035 or visit us as universalfunding.com. Not only will we address your cash flow needs but we’ll also make sure you use the proper reconciliation methods to keep your accounting up to date!

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