If factored receivables will not be tracked at the customer level, should this contra account be set up as an Other Current Asset rather than contra-A/Rec to not mess up the A/R aging?
The general ledger accounting will work that way, but what about the individual Customer's record ? Perhaps as your factored AR accounts get paid you can enter a creit memo using an item that will reduce your payable.
I have successfully designed a chart of accounts sytem currently in use by a manufacturing company. We set up each factor as a Bank account in the Chart of accounts. Each customer is used as normal. The active invoice has payment received with the payment deposited to the factor bank account. When you receive the transmittal notice from the factor that funds have been released to your bank account, use transfer funds feature...Florrie Southerland, ProAdvisor
Thank you Gaca & flosouth. I like your recommendation. Problem is some AR is being collected by client, while other by Factor. The Factor is keeping the colllections & appyling them against amount advanced to client. We're treating it like a contra AR or liability account with Factor per GAAP. Thank you for the tip!
