Case: Factoring Billing in Netvisor Using Supported Finance Company, Payments Made with References : Netvisor

This guide describes how to manage factoring invoicing in the Netvisor system when the financing company is supported by Netvisor. The guide covers examples of recording payments when payments are made using a reference.

At least a few financing companies offering factoring invoicing provide bank statements for accounts related to factoring invoicing and reference payment material for payments. This facilitates accounts receivable monitoring related to factoring invoicing and bookkeeping work in companies and accounting offices.

The following example describes the factoring invoicing process from both the accounts receivable and bookkeeping perspectives according to the procedures described below. A table-like material of bookkeeping vouchers and entries has been compiled. Note that this is one way of handling factoring invoicing, where bank statements are obtained from factoring accounts and payments are received with the original invoice reference numbers.

Factoring invoicing handling process in the example:

The financing company is one of the financing companies supported by Netvisor regarding factoring invoicing.
The company has a financing and invoice account with the financing company.
The financing company electronically delivers bank statements from both accounts. The delivery frequency of the bank statements should be the same as for the company’s bank account to which the financing company pays the financing.
The financing company delivers reference payment material for payments received in the invoice account.
The financing company pays the payments for invoices transferred to factoring with the original reference numbers.
Necessary posting rules are created for bank statement processing and these rules are utilized in the creation of vouchers from bank statements (using posting proposal).
Expenses charged by the financing company from the factoring financing account are recorded in bookkeeping through bank statement processing.
When the events visible in the invoice account are recorded in bookkeeping according to this example, the balance of the bookkeeping invoice account always matches the balance of the factoring invoice account statement, regardless of whether the invoiced sales have already been recorded in the invoice account. If the sales have not yet been recorded in the invoice account, the so-called sales in transit are visible in account 1717 Factoring receivables in transit.

Factoring implementation in my example case

Accounts used in the example

1717 Factoring receivables in transit, interim account for handling payments (Sales > Basic data and settings > Factoring account management)
1718 Factoring sales receivables account invoice account (Company name > Bank accounts)
1910 Bank account
1995 Transfers in transit
2841 Factoring credit account financing account (Company name > Bank accounts)
2939 Value-added tax liability
3000 Sales
9690 Other financing expenses

1. Set up the invoice and financing accounts reported by the financing company in Netvisor's bank accounts with the following information:

Select Company name > Bank accounts.
Set up the invoice account according to the information provided by the financing company.

Invoice account

Financing account (The bookkeeping account for the financing account is chosen as either 2639 or 2841 depending on the nature of the financing, in the example account 2841 is used.)

Set up the financing account according to the information provided by the financing company.
Select 2639 or 2841 as the bookkeeping account for the financing account depending on the nature of the financing.

2. Set up the factoring account in Netvisor according to the guide. In the example, the factoring account is defined as follows:

Select Sales > Basic data and settings > Factoring account management.
Set up the factoring account as described in the linked guide.

3. Set up the necessary posting rules through bank statement processing when the respective transactions are visible on the bank statement. This way, you can define the correct identification data (for example payment subject code, payment name specification, bank account) as precisely as possible. Remember that there is a difference between uppercase and lowercase letters in the payment name specification.

Select Bookkeeping > Bank statement processing.
Open the bank statement on which the transaction related to factoring is visible.
Create a posting rule based on the transaction and define the identification data (e.g. payment subject code, payment name specification, bank account).
Save the posting rule and use it to create the posting proposal.

Factoring invoice creation and payment recording, example case

1. Set up the customer and define the factoring account on the customer card.

Select Sales > Customers.
Create a new customer or open an existing customer.
Select the Additional information editing tab.
Select a factoring account for the customer.

2. Create invoices and send them. In the sending process, both the factoring notification and the sales invoice are automatically sent. Vouchers are created from the sent invoices with the following content:

Create sales invoices for customers for whom a factoring account has been defined.
Send the invoices according to the normal sending process.
Note that the system creates both the factoring notification and the sales invoice.

3. Handle the transaction visible on the factoring invoice account bank statement using the posting proposal.

Select Bookkeeping > Bank statement processing.
Open the bank statement of the factoring invoice account.
Select the transaction related to the factoring invoice.
Use the previously created posting rule to create the posting proposal.
Check the posting and record the transaction in bookkeeping.

4. Handle the financing transferred by the financing company to the factoring financing account from the bank statement using the posting proposal.

Select Bookkeeping > Bank statement processing.
Open the bank statement of the factoring financing account.
Select the transaction corresponding to the financing company’s financing transfer.
Use the posting rule to create the posting proposal.
Check the posting and record the transaction in bookkeeping.

5. Handle the financing company credit on the company’s bank account from the bank statement using the posting proposal.

Select Bookkeeping > Bank statement processing.
Open the bank statement of the company’s bank account.
Select the transaction corresponding to the financing company’s credit.
Use the posting rule to create the posting proposal.
Check the posting and record the transaction in bookkeeping.

6. Handle the customer’s paid invoice as a reference payment and as a payment in accounts receivable.

Receive the reference payment material from the financing company to the invoice account.
Let the system create the automatic posting for the reference payment.
Note that at the same time the payment is recorded in accounts receivable.

The content of the reference payment voucher is as follows:

When the customer pays the invoice, in addition to the reference payment, a transaction is created both in the invoice account and in the financing account. The postings of these transactions are handled in the following sections.

7. Handle the payment transaction on the financing account bank statement using the posting proposal.

Select Bookkeeping > Bank statement processing.
Open the bank statement of the factoring financing account.
Select the transaction corresponding to the customer’s payment.
Use the posting rule to create the posting proposal.
Check the posting and record the transaction in bookkeeping.

8. Handle the payment transaction on the invoice account bank statement using the posting proposal.

Select Bookkeeping > Bank statement processing.
Open the bank statement of the factoring invoice account.
Select the transaction corresponding to the customer’s payment.
Use the posting rule to create the posting proposal.
Check the posting and record the transaction in bookkeeping.

9. Handle the missing part of the payment transferred by the financing company to the company’s bank account in the same way as in sections 4 and 5.

Select Bookkeeping > Bank statement processing.
Open the bank statement of the factoring financing account and record the transfer from the financing account to the bank account.
Open the bank statement of the company’s bank account and record the incoming transfer to the bank account.
Use posting rules to create posting proposals for both postings.
Check the postings and record the transactions in bookkeeping.

10. Handle the factoring expenses visible on the factoring financing account and record them to the desired expense accounts.

Select Bookkeeping > Bank statement processing.
Open the bank statement of the factoring financing account.
Select the transaction containing factoring expenses and interest.
Record the expenses to the desired expense accounts (in the example, expenses and interest are not itemized and the voucher is recorded to one expense account).

Bookkeeping entries and accounts receivable events

Frequently asked questions

Question: How is factoring invoicing enabled in Netvisor when the financing company is supported?
Answer: First set up the invoice and financing accounts reported by the financing company in Netvisor’s bank accounts, set up the factoring account in Netvisor according to the factoring help and create the necessary posting rules for bank statement processing. After this, you can create factoring invoices and handle the payments according to the example process in this help.

Question: Which bookkeeping accounts are used in the factoring invoicing example?
Answer: The following accounts are used in the example: 1717 Factoring receivables in transit, 1718 Factoring sales receivables account (invoice account), 1910 Bank account, 1995 Transfers in transit, 2841 Factoring credit account (financing account), 2939 Value-added tax liability, 3000 Sales and 9690 Other financing expenses.

Question: How do posting rules affect the handling of factoring invoicing?
Answer: Posting rules make it possible for transactions related to factoring visible on the bank statement to be posted automatically using the posting proposal. In this way, bookkeeping vouchers are created correctly and the balance of the factoring invoice account matches the balance of the factoring invoice account bank statement.

Question: How is a customer’s paid factoring invoice recorded in Netvisor?
Answer: When the customer pays the invoice, a reference payment is received and creates an automatic posting as well as a payment in accounts receivable. In addition, a transaction is created both in the invoice account and in the financing account, which are recorded in bookkeeping via bank statements using posting rules and posting proposals.

Question: How are factoring expenses recorded in bookkeeping?
Answer: Factoring expenses visible on the factoring financing account are recorded in bank statement processing to the desired expense accounts. In the example, expenses and interest are not itemized but are recorded to one expense account (9690 Other financing expenses).

Keywords: Factoring invoicing, posting rules, accounts receivable, bookkeeping, supported financing company

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