Factoring is done when a company is low on cash flow from their customers and need extra working capital. The funding or factoring company purchases their accounts receivable balances in return for increased working capital. Factoring is different than a loan in the fact that it is an Asset Based Lending. Factoring is often used in manufacturing and wholesale types of businesses. Companies of all sizes, from startups to mature companies, enjoy a number of benefits from Factoring, including improved cash flow, minimized bad debts, reduced operating expenses, expanded working capital financing and improved management information.
You may need to :
This article shows you how to enter the A/R transactions into QuickBooks.
Before pursuing any of these options, consult with your accounting professional.
When you receive payment from the collection agency: