My Client is based on Cash Accounting in Sage and from the 01/10/11, has starting factoring their sales invoices via Lloyds commercial Finance.
As per users help on this site, I set the Factoring company up as a separate bank account in sage.
When client receives money from factoring company, Im showing this as a transfer from Factoring Acc to Clients Bank Acc and from the factoring statements, Im able to see what clients have paid the factoring company and Im paying off the customers invoices through the factoring bank account.
For the months of Oct, Nov & Dec my Client received aprox £40k from Lloyds Finance
For the Months of Oct, Nov & Dec Lloyds finance received from my clients customers aprox £25k
my question is, my Client has received 40k in this quarter but his only going to pay the VAT on the £25k as thats what the clients have paid Lloyds, does that seem correct?
I would also set up the Factor account as a customer and post all invoices to that account. When the factor statements come, you can match off payments against invoices and this way identify the outstanding invoices at year end.
I had issues when my client went over the threshold for cash accounting whilst using factoring and this way it will save any future hassles.
