Factoring Charges

drooble

I wonder if someone could help me. I have a new client who is using a factoring firm to collect sales income. Could anyone tell me if the factoring charges (which are shown on an a statement, but are deducted from the amount they pay to the company I am working for) are shown in the expenses part of the profit and loss statement as 'Factoring costs' or if they are reduced as a kind of 'cost of sales' in the revenue part.

Many thanks for any advice!

JodieR

Factoring charges need to be recorded on the P&L as an expense, in the same way in which bank charges are accounted for. If you've not already done so I find that it helps to set up a bank account on your accounts software for the factoring account and post all factoring transactions there, and this can then be reconciled to the factoring company's statments.

drooble

Thanks to other postings here, I had already opened the factoring account. Thanks for answering my question