SAGE Problems / Factoring Fees

SAGE Problems / Factoring Fees

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Hi

I have started a new job and have been asked to ensure that sage is updated to include all financial transactions etc.  I had a problem with how to deal with invoices factored out but found a solution among earlier answers.  I am however struggling with how I should deal with in sage, payments received from customers whos invoice has already been sent to the factor.  The money received simply goes into the business account and is then transfered out to the factor.  My initial thoughts were to leave both transactions out of sage altogether as they effectively balance each other out.  With however 20 to 30 of these payments going in and out each month it makes the bank reconciliation difficult.  Does anyone have any suggestions regarding how I should deal with this.  I did suggest that this money could go through a separate account but this was rejected.

Also with regard to sage until the end of the comapnys financial year on 31 December not all transactions went through sage with some manual records kept which I am supposed to get rid of.  The various bank accounts have never therefore been reconciled.  I am trying to get opening balance figures but does anyone have any suggestions as to how I can best bring the various accounts up to date as at 31 December (the end of year has already been run prior to my arrival).  to allow me to start from a balanced position.  I am particularly concerned about clearing the large amount of unreconciled bank transactions.  Would I be best just going ahead and showing all amounts as reconciled up to the end of december?

Any advice would be greatly appreciated.

Thanks

Steve

Replies (14)

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By pr27
18th Jan 2013 14:08

Hi there

For factoring accounts, I always setup a new bank account for the factoring account. This account will always be overdrawn, although in the financial statments it should be shown as other creditors.

By not recognising the transactions, I think you're going to run into trouble.

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Replying to marks:
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By steve2646
20th Jan 2013 02:25

Hi

Thanks for the reply.

There is a factoring account which I now credit when money is transfered out and it gets debited when the factor tells us money is paid etc.  The problem is that despite the debt being transfered to the factor some customers still pay us with this money going into the current account and then being paid by us to the factor.  I am not sure how to deal with this in sage and although I think I can safely ignore both transactions with 20 to 30 payments going in and out each month it does make reconciliation very difficult and other records need to be kept incase there is some sort of problem with money passed on to the factor.  I would like to put this through sage but just cant figure out how.

Steve

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By petersaxton
20th Jan 2013 08:10

Simple

" this money going into the current account and then being paid by us to the factor" Transfer from the current account to the factor account.

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By tom123
20th Jan 2013 08:17

Never 'ignore' transactions - there is always a way

My advice would be that you should never ignore any transactions on the basis of them cancelling. I have never 'not posted' transactions of that type.

Factoring can be fiddly initially. When I first needed to use it, I wrote out a big flipchart page with the transaction flows to cement the idea.

In order to reconcile your main account you will need to enter the customer receipts and then subsequent transfers.

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By petersaxton
20th Jan 2013 08:34

My advice

I agree with tom123 about never ignoring transactions. Usually it is best to enter the transactions in a spreadsheet for a month. List the sales ledger transactions in summary, list the bank transactions in summary and list the factor transactions. With all that information you can then compare the transactions that appear both in the company and in the factors. You can then record what transactions you need to make.

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By steve2646
20th Jan 2013 14:05

Thanks for the replies.

If I enter the customer payment and then the subsequent transfer this I think would mean that the factors account would show that we owe less than we infact do.  I would expect to Dr the factors account and CR the debtors account when we receive a list from the factor detailing payments received and to DR the factors account at an earlier stage could confuse matters.  Having said that it would probably be easier to identify and ignore 20 to 30 invoices listed by the factor each month rather than try to identify and match the money going into the bank each month and back out to the factor.

A better solution might be to find a way for this money to be paid directly to the factor without going through our bank or perhaps a separate bank acount just to deal with this but that might present its own complications.

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By petersaxton
20th Jan 2013 14:11

Customer payment to you?

Why should that reduce the factors account? The customer is paying you.

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By petersaxton
20th Jan 2013 14:12

Factor?

Are you sure that the invoices are factored or are they using invoice discounting?

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By petersaxton
20th Jan 2013 14:15

Sales invoices

When you raise sales invoices what entries do you make?

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By steve2646
20th Jan 2013 14:56

I dont think I am explaining this very well

The customer pays us but as the money should have been paid to the factor we must pass it directly to him with it passing through our current account on the way to him.  The customer is therefore not paying us, he is at this stage paying the factor with us being caught in the middle.  Any sage transactions to reflect the money going in and out should therefore (I think) leave the debtors, bank and factors accounts with the same balances as they had before the money passed through our account

When an invoice is sent to the factor he allows us to draw down on a percentage of the amount factored.  The debt stays on our books until the factor sends us a list detailing which invoices have been paid at which point we would credit the debtors account and debit the factors account with any factoring charges being recorded in the normal way. 

 

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By petersaxton
20th Jan 2013 15:21

Factor or invoice financing

If the trade debtors are in the books of the factor and not your books then when you pay the money to the factor for customer payments to you they don't affect your balance with the factor. If it's invoice discounting then if you pay the invoice discounter the balance with them is reduced.

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By petersaxton
20th Jan 2013 15:24

Factoring

"When an invoice is sent to the factor he allows us to draw down on a percentage of the amount factored.  The debt stays on our books until the factor sends us a list detailing which invoices have been paid at which point we would credit the debtors account and debit the factors account with any factoring charges being recorded in the normal way. " Are you saying that the debtor stays on your books even if you have sold them to a factoring company?

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By petersaxton
20th Jan 2013 15:32

Trade debtors and invoice discounting or accounting as if

If you are accounting as if it is invoice discounting by retaining the sales invoice on your books then does this company need you to pay them? They will have a list of sales invoices with a %age they will allow you to draw from and as long as you tell them which sales invoices have been paid to you they would only have to adjust their list. If you have drawn down more than they allow you would have to make a payment.

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Replying to Democratus:
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By steve2646
21st Jan 2013 09:34

That makes sense.  I will see

That makes sense.  I will see if the company can or are prepared to do that.  Thanks for your help.

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