Factored Invoice Accounting: QuickBooks Reconciliation Techniques

Three Steps to Record Factored Invoices in QuickBooks

Step 1: Create an Accounts Receivable Account
First, you will want to create an Accounts Receivable Account in the 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: Is There a Balance Owed to You?
If you are factoring with Universal Funding, check your eFactor account to view which invoices have been paid. To stay up-to-date, we recommend you do this on a daily basis. In QuickBooks, go to Customers and then Receive Payments. Here, you will receive payments for the factored debts. Instead of applying the payment to the usual “Undeposited Funds” account, post it to a new account. This new account is called “Other Current Asset” and is named “Due from Factor.” This shows that Universal Funding owes you a balance.

Step 3: Deposit Funds into Checking Account
When you receive funds from Universal Funding or your factoring company, deposit them into your checking account. Select “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 QuickBooks challenges, don’t hesitate to contact your Universal Funding account representative who will be happy to walk you through the reconciliation process.

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