Sunday, August 14, 2011

Accounting Techniques for Factored Receivables

Okay. So, I have decided to factor my receivables to improve my cashflow and working capital position, but my CFO/controller is grilling me about how to account for factored receivables and the funds collected...what do I do?!

There are numerous ways that ledger entries may be made to account for the transactions, funds advanced, and reserves. It is incumbent upon the business owner to seek counsel and tax advice on the best manner to account for these entries. Generally, the business owner is able to successfully maintain a stronger balance sheet when using factoring versus taking on additional debt or equity partners.

Should you so desire, please contact me directly for a guide on how to account for factored receivables. My contact information is available at the top, right of this website.

Disclaimer: The information contained herein should not be construed as advice, guidance, or recommendations regarding financial reporting standards or practices, nor should it be used as basis for any claims now or under any circumstances against the author or Bibby Financial Services. It is the sole responsibility of the business owner to consult with their tax advisor and/or attorneys in matters relating to financial reporting. Bibby Financial Services holds no claim to the accuracy or authority of the information provided in this article, or any documents provided by author, or associate, and shall be held harmless in any adverse actions claimed by reliance upon the information provided in any form.
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