Accounting for Factoring - A How to Guide fo Small Business.

Many of the most successful entrepreneurs follow a golden rule of small business operation: Do what you love and success will follow. And while that may be true, for the vast majority of these business owners, what they love to do has very little to do with accounting, spreadsheets, general ledgers, credits, and debits, and factoring loan facilities. However, running a successful company does have quite a bit to do with small business financing, particularly how you handle the accouting for selling your accounts receivable.

In some ways, commercial finance factoring can initially seem to complicate your small business accounting in that changes may be necessary. For some small business owners, any change in bookkeeping can seem overwhelming. The key is to keep meticulous records and use the right method of accounting for the type of factoring loan facility you have.

Utilizing an experienced, informed accountant familiar with factoring firm services is invaluable. S/he will be able to walk you through the various options for keeping accurate books when using invoice factoring so that your ledger demonstrates not only your debits and credits, but also reflects the third-party involvement of your factoring company. For example, recorded one way, accounts receivable factoring could give the impression of an asset-based loan in your ledger. However, done properly, this same interaction can actually bolster your balance sheet by showing a payment from your factoring company, Fast A/R Funding, as an asset as opposed to a debt.

In addition, factoring-related fees must be accounted for in your ledger in specific ways to maximize the benefits accounts receivable factoring can have on your balance sheet. As well, debits and credits related to non-factored invoices must, of course, be tracked. As you begin employing invoice factoring services for your small business financing needs, your accountant will be an indispensible asset, and so will Fast A/R Funding. We are dedicated to your success. That’s why our world-class customer support is available to you 24/7. For more information, email us at info@fastarfunding.com or call 888.833.2286 today.

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Disclaimer: The information presented above is general and intended for educational purposes only. It is not a substitute for practical legal or accounting advice on any specific situation.