Wondering how your FundThrough PRO advances should be categorized for book keeping? Read on! 

Let us begin by walking you through an example.  Let’s imagine your business has $100,000 of invoices outstanding and would like to make use of that money to grow your business. A factoring agreement is made with FundThrough, in which you are charged a transaction fee of 1.5%, and a daily funding fee of .05%. FundThrough will retain 20% of the gross accounts receivable purchased as a reserve. Let’s also assume that your customer decides to pay in 37 days.

Assumptions:

-$100,000 in invoices factored
-20% reserve, $80,000 gross advance
-$1,500 transaction fee (1.5%)
-Cash advance will be the gross advance less the transaction fee
-Your customer pays in 37 days, resulting in $1,480 in daily funding fees
 (.05% daily fee * 37 days * 80K gross advance)

Step 1: Record the sale of the Accounts Receivable

  • Create a short-term liability account called: Due to/from FundThrough 
  • Record the transaction at the time of the advance: 

A. [debit] your cash account for the amount of the advance received
B. [debit] the transaction fee expense and any bank charges
C. [debit] your Due to/from FundThrough account by the reserve amount
D. [credit] your Accounts Receivables for the total amount factored 

Step 2: Record the Collection

  • Record the transaction at the time of the remittance:

A. [debit] your cash account by the amount remitted
B. [debit] the daily funding fee expense
C. [credit] your Due to/from FundThrough account by the reserve amount 

To find out how to download a statement of your FundThrough transactions, including a breakdown of  principal and fees for each repayment, click here.

 

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