How to Process Factored Debt in Garage Hive

Important:

Because this is an accounting issue, please consider sending this documentation to your accountant for approval and/or comments.

Debt Factoring is an external, short-term source of finance for a business. With Debt Factoring, the business raises cash by selling their outstanding sales invoices (receivables) to a third party (a factoring company) at a discount. Here is how to process a factored debt in Garage Hive:

  1. Suppose you have a customer who owes the company £802, and then you transfer the money to a factoring company, in this case Payment Assist. So, now Payment Assist now owes you £802 and the customer owes them.
  2. In the agreement, Payment Assist pays the company £650, leaving a balance of £152 as its commission; You may now process the balance as the commission.

  3. To begin, use the Payment Assist Commission item card available in the items list, or create an Item card with this setup; make it a Non-Inventory, and add an Item Category Code (PAYMENTASSIST) to distinguish it from other item category codes. If you have more than one factoring company, create a separate item card for each.
  4. The Posting Details should be: Gen. Prod. Posting Group - FDEBT and VAT Prod. Posting Group - STANDARD. If this is not set up in your system, please contact the support team for assistance.

  5. After you’ve created the item card, search for Sales Credit Memo in the top-right corner and select the related link.
  6. To create a new sales credit memo, click New from the actions bar.

  7. In the General FastTab Customer Name field, enter the name of the factoring company, Payment Assist, as the balance is now under the company.
  8. In the Lines sub-page, enter the Item you created as the Payment Assist Commission, Quantity to be one, and the Unit Price as the balance, in this case £152.

  9. To post the amount, select Posting from the actions bar, followed by Post. Before posting ensure that you have added the Payment Terms Code field, under the Credit Memo Details FastTab.

  10. The balance from Payment assist will now be £0, and the sales/payment to Payment Assist will be £650.

  1. To apply the amount in the customer account, select the Customer, and click on the amount in the Balance column.
  2. Select Process from the actions bar, followed by Apply Entries.

  1. In the lines that are yet to be applied, add the Applies-to ID by selecting Process from the actions bar, followed by Set Applies-to ID.
  2. When done adding the Applies-to ID, select Process and then Post Application. Click OK in the pop-up window.
  3. The entries are now applied for Payment Assist, and are no longer open.


See also

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