How to Record Recourse Factoring Buy-back
Records the repurchase of a non-performing receivable from a factor when the client defaults under a recourse agreement.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Receivable (Restated) | Asset | 50,000.00 | - |
| Cash at Bank | Asset | - | 50,000.00 |
💡 Accountant's Note
Under recourse factoring, if the end customer fails to pay, the entity must buy back the invoice from the factor, restoring the receivable to the balance sheet.
Practitioner & Systems Framework
💻 ERP Architecture
Reverse the factoring clearing entry and move the balance to a 'Past Due' or 'Disputed' AR bucket.
⚠️ Audit Flags
Aging reports showing sudden spikes in receivables due to buy-backs may indicate credit risk issues.
📄 Required Documentation
Notice of non-payment from factor and bank settlement advice.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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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