Re: Factoring Receivables

["Bob Tenney" <bobtenney@xxxxxxxxxxxxx>]

Mike, The answer to this question depends on who is going to collect the 
outstanding invoices.

If your client is going to do the collecting:

  a.. When you factor an invoice add a "Factored" attribute to the invoice 
transaction. (You can do this through WW Transactions after the invoice has 
been posted). 
  b.. Record customer payments in the usual way.
  c.. Use the "Factored attribute to develop queries identify and report on the 
status of factored invoices.
  d.. In this scenarion, you would use cash transactions to debit cash / credit 
factored AR liablility when you sell the invoices and debit factored AR 
liability + interest expense and credit cash when you repay the factor.
If the factor does the collecting:

  a.. Enter a cash transaction for the value of the factored invoices and 
allocate it to the invoices to get them off your books. Debit Cash / Credit AR
  b.. Enter a cash payment transaction for the factor's discount. Debit 
Interest Expense / Credit Cash.
  c.. In many cases, factors buy the invoices "with recourse" if they are 
uncollectable. If this happens, you copy the returned invoices to set them up 
as receivables (Debit AR / Credit Suspense). Then make a cash transaction to 
reimburse the factor. In this case the entries are debits to Suspense and 
Interest Expense and a credit to Cash for the amount paid to the factor.
  d.. Flagging factored invoices with a "Factored" attribute so you can report 
on them is probably a good idea.

Bob Tenney
Bob Tenney Solutions, LLC
MAPICS - FRx - Presence - Crystal Reports
828-526-8976

Visit www.tenneypubs.com for books about
IFM, COM, G/L Interfaces
Info WorkPlace, Cost Accounting, 
FRx, and PRESENCE
----- Original Message ----- 
From: "Michael J. Dreimiller" <mandis-inc@xxxxxxx>
To: <MAPICS-L@xxxxxxxxxxxx>
Sent: Tuesday, August 26, 2003 8:25 AM
Subject: Factoring Receivables


> I am working with a company that has IFM installed and has a need to factor
> receivables.  I would appreciate comments as to how this can be accomplished
> with IFM and COM.
> 
> TIA
> 
> Best regards,
> 
> Mike Dreimiler
> Mandis Inc.
> 410-526-5996
> 
> 
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