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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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.
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.
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.
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.
Customer payment to you?
Why should that reduce the factors account? The customer is paying you.
Factor?
Are you sure that the invoices are factored or are they using invoice discounting?
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.
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?
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.