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Invoice Finance / discounting

honadahonada Settling In NicelyRegistered Posts: 28

I have been working with discounting invoices for a couple of years and have managed to set up all the necessary accounts, work my double entry and bank reconciliation.

I have been approached my the management team with a query which I would appreciate your help and knowledge, the balance sheet has got the Trade Debtor as a Current Asset and the invoice discounting as a loan on the liability, however the query is since we have sold the debt to the bank do we still show the trade debtors as an asset on the balance sheet.

There is some logic behind the query but I am not sure the accounting procedure with regard to the balance sheet.

Any help would be greatly appreciated.

Thank you


  • CeeJaySixCeeJaySix Well-Known Registered Posts: 645
    Also depends on whether the factoring arrangement gives the factor recourse to your company if debts are unrecovered ie. have you passed on the risks and rewards
  • honadahonada Settling In Nicely Registered Posts: 28
    Thank you I am reading the agreement for the purchase of debt in details to identify if the arrangement is with recourse or not, I guess it all depends on the responsibility of the risks and rewards being with the company or shifted to the factoring company.
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