#IFINANCE BOOKKEEPING HOW TO#

This will be deducted directly from your available fundsĦ. You’ll have to pay the financier a discount charge (interest) and fees - the amount depends on which invoice financier you use. Once they’ve received the money from your customer the remaining unfunded amount will appear as available funds on your on-line accountĥ. Your customer will then need to pay directly into a trust account which the provider will set up for youĤ. This will appear as available funds on your on-line account, which you will be able to withdraw whenever you wishģ. They will then make a percentage of the invoices available to you upfront. You will then need to upload these onto an online account, which your provider will set up for youĢ. Usually this is done by extracting a sales day book, or list of invoices from your accounting system at the end of each day or week. When you raise an invoice, you will need to send the details to your finance provider.

#IFINANCE BOOKKEEPING HOW TO#

The below explains how to deal with both.ġ. You’ll still be responsible for collecting debts if you use invoice discounting, but it can be arranged confidentially so your customers won’t find out.ĭespite the popularity, and simplicity of both types of invoice finance, many business owners expect the admin involved to be more time consuming and complicated than it actually is, and in my experience book-keepers and accountants, who are new to invoice finance often struggle with making the correct accounting entries. Invoice discounting - the invoice financier won’t manage your sales ledger or collect debts on your behalf. This means your customers will know you’re using invoice finance. In broad terms, the two most common types of facility are:įactoring - also known as ‘debt factoring’ - usually involves an invoice financier managing your sales ledger and collecting money owed by your customers themselves. To do this, the business borrows a percentage of the value of its sales ledger from a finance company, effectively using the unpaid sales invoices as security for the borrowing. Invoice discounting and factoring allow a business to draw money against its sales invoices before the customer has actually paid. Invoice finance is an increasingly common form of short-term borrowing, often used to improve a company's working capital and cash flow position.

Ifinance bookkeeping