How to Record Factoring Commission Expense
Records the service fee charged by a factor for managing the sales ledger and collections, distinct from discount interest.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Factoring Service Expense | Expense | 1,500.00 | - |
| Factor Current Account | Asset | - | 1,500.00 |
💡 Accountant's Note
This entry records the administrative fee or commission charged by the factor for credit protection or collection services, reducing the amount due from the factor.
Practitioner & Systems Framework
💻 ERP Architecture
Book as a non-stock service invoice against the Factor's vendor account.
⚠️ Audit Flags
Verification of fee percentages against the factoring agreement; ensuring fees are not double-counted with interest.
📄 Required Documentation
Factor's monthly statement, Fee Invoice, and Factoring Agreement.
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Related Journal Entries
Supply Chain Finance & Trade Finance
Factoring Without Recourse — True Sale of Receivables (Derecognition Under ASC 860)
Supply Chain Finance & Trade Finance
Factoring With Recourse — Secured Borrowing (Receivables Remain on Balance Sheet)
Supply Chain Finance & Trade Finance
Reverse Factoring / Supplier Finance Program — Buyer's Accounting (ASU 2022-04 Disclosures)
Discussion & Community Questions
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