This guide covers the factoring invoicing process from both the sales ledger and accounting perspectives. It provides step-by-step instructions for performing actions and a list of necessary accounting accounts.

Using factoring invoicing often employs accountants in companies and accounting firms. The following example describes the factoring invoicing process from both the sales ledger and accounting perspectives according to the methods described below. A table-like material of accounting vouchers and entries is compiled below. Note: this is one way to handle factoring invoicing.

Factoring invoicing processing process in the example:

  • The finance company is one of the supported finance companies in Netvisor regarding factoring invoicing.
  • The finance company pays the invoices transferred to factoring in a lump sum to the company's bank account without a reference, directly deducting its own fee from the payments. A breakdown of financed customers and invoices, as well as fees charged by the finance company, can be obtained from the company/their online service.
  • The lump sum is recorded from the bank statement to an intermediary account specifically established for processing factoring payments. It is advisable to create an accounting rule for recording lump sum payments from the bank statement.
  • The processing of payments for sales invoices is done using the Mass Payment Entry function, utilizing the intermediary account established for processing factoring payments.
  • The fee charged by the finance company from the lump sum payment is recorded with a separate voucher according to the breakdown provided by the finance company.
  • The balance of the intermediary account established for processing factoring payments is monitored using open transactions and transaction matching, allowing the lump sum payment to be linked to sales invoice payments and the voucher, with the fee charged by the finance company recorded. The total sum of these transactions should be zero.

Factoring implementation in my example case

1. Establish a factoring account in Netvisor according to the instructions. In the example, it is done like this:

2. Establish an intermediary account for processing factoring payments in the chart of accounts and activate transaction matching for the account. In the example, it is done like this:

3. Establish a new payment method for mass payment entry (Accounting/Sales/Basic Information and Settings/Payment Methods). In the example, it is done like this:

Factoring invoice creation and payment entry, example case

1. Establish a customer, remember to define the Factoring account on the Additional Information Editing tab of the customer card.

2. Create invoices and send them. The sending process automatically includes both the factoring notification and the sales invoice to be sent. Vouchers are created from the sent invoices, with the content as follows:

3. The finance company pays a lump sum for the invoices to the company's bank account. It is advisable to create an accounting rule for these transactions on the bank statement, where the accounting is defined for account 1717. The voucher looks like this:

4. Record the payment for open sales invoices according to the breakdown received from the finance company using the mass function. Retrieve open sales invoices through the sales invoice list and select the relevant invoices, then choose Invoice Actions and Record as Paid.

The payment date is given as the same day the lump sum payment was received in the bank account, and the Bank Account/payment method used is Factoring payment entry for the invoice.

After this function, the sales invoices are in paid status, and MS vouchers are simultaneously created in the accounting.

5. Record the costs charged by the finance company with a separate voucher, done like this in the example:  

6. Finally, ensure the balance sheet breakdown is correct for account 1717 Factoring sales receivables in transit by going to account-specific entries and linking all relevant entries together. It is advisable to start the linking from the bank statement entry by pressing the second arrow of the transaction matching:

Select the transactions that belong to this entirety and match them.

If everything went okay, the end result should be like this, where the total sum of the events in the Open Amount column matches the account balance: 

By selecting Show only open transactions, you can easily find the entry lines and vouchers that form the account balance. If you accidentally linked the wrong lines together, the matching you created will be undone when you click the link icon visible on the left side of the line.

Accounting accounts used in the example

1717      Intermediary account for processing factoring payments, entries from the bank statement are made here, and sales invoice payments are settled against this account

1718      Factoring sales receivables account (Sales/Basic Information and Settings/Factoring Account Management)

1910      Bank account

3000      Sales

2939      Value-added tax liability

Accounting entries and sales ledger transactions

Keywords: Factoring invoicing, sales ledger, accounting, payment processing, accounting rule, transaction matching.

This article has been translated using an AI-based translation tool. The contents or wording of these instructions may differ from those in other instructions or in the software.


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