Hi, I run my own small business and my accountant doesn't have much knowledge of Sage Line 50. We used a financing company who paid for some stock for a large customer, our customer paid the finance company and then they paid us. I am not sure how to enter this on Sage as it came in over 3 weeks as 3 seperate payments as there were multipule invoices.
I am thinking I should perhaps post the income to the customers invoices, but I don't know how to take it from there.
You supplied goods to a customer (going to be their stock) on account A finance company are paying for the goods on behalf of the customer.
So the customer is still ultimately responsible to your company for paying the outstanding balance. It just happens that you/ they arranged finance to cover the payments?
If that is right, then I would post the sales invoices to the customers account as normal, and debit their account with payments from the finance company when you receive them. I cannot see any reason why the finance company needs any specific entry on the accounts
It doesn't matter that it is the finance company clearing the debt, that's an arrangement between your customer and the finance company. I would say it is important to know how much the customer owes you, in case they default paying the finance company, who in turn stop paying your company.
Of course, I may have totally misunderstood the scenario. If so, can you explain again.
The finance company purchased the stock on my behalf, so for example, the stock cost 2k, I invoiced my customer 3k, so I only received 1k from my finance/factoring company.
So I need to post that 1k onto their customer account and then somehow need to account for the 2k of costs?
I was thinking of posting 3k to my customer (as they paid the full amount) and the creating a transaction that won't show on my bank statement, for the same day, for costs of 2k being paid to my finance company?
Hope that makes sense - I'd like to know if that's allowed or not, as I'm keen to keep best practice.
Ther are accounts you need to post to, that haven't appeared in your summary yet. Purchases, Customer A/c and sales.
Very basically what is happening is
Date
Account
DR (£)
CR (£)
Jan-01
Purchases a/c
2000
Buy stock
Jan-01
Factoring a/c
2000
Paid by factoring (create a supplier account for them)
Jan-02
Sales a/c
3000
Sell to customer
Jan-02
Customer a/c
3000
Customer debt reated
Jan-03
Customer a/c
3000
Customer passed to factoring company
Jan-03
Factoring a/c
2000
Factoring debt cleared
Jan-03
Bank a/c
1000
Difference is banked (received from factoring company)
You haven't mentioned any handling fees or charges from the factoring company. If this is going to be a regular thing there are probably better ways to do it but for now it shows you what needs to happen.
If factoring is going to be a regular finance option for you, and if you have registered your copy of Sage, you can access Ask Sage. There some articles in Ask Sage that cover factoring.
For example, they suggest setting the Factoring company up as a bank account, which make handling regular transactions easier. Article 11241 covers factoring on standard VAT (which we haven't dealt with)
Bill
-- Edited by Wella on Monday 17th of January 2011 05:35:55 PM
