| Factoring with recourse |  |
| For factoring with recourse, ERP LN creates the financial posting described here. Send invoices to factor If the invoices are factored with recourse, when you send the invoices to the factor ERP LN makes the following entry to create a provision to repay the factor if the customer should fail to pay: Debit: Invoices Factored Credit: Contingent Liability for Factored Invoices The amount posted is the net amount factored with the factor. This amount is: The invoice amount - deductions - credit note amount. Settle the invoice When the factor notifies you that the customer has paid, you must settle the factored invoice. ERP LN makes the following entry: Debit: Contingent Liability for Factored Invoices Credit: Invoices Factored Repay the factor If the customer fails to pay, your company must reimburse the factor. You must create a credit note for the factor for the amount to be repaid. If the Create debit notes while repaying check box in the CMG Parameters (tfcmg0100s000) session is selected, ERP LN creates a debit note for the original pay-by business partner. If this check box is cleared, ERP LN reopens the original invoice. ERP LN creates the following entries: For the credit note for the factor, for the amount to be repaid to the factor: Debit: Contingent Liability for Factored Invoices Credit: Customer Control Account of the Factor For the debit note for the original pay-by business partner: Debit: Customer Control Account of the Invoice-to business partner. Credit: Invoices Factored Credit: Discounts and other deductions The debit note is created in Central Invoicing and uses the transaction type defined for debit notes. The following applies to the debit note: You can enter the due date of the debit note. The terms of payment of the invoice-to business partner are used. No discounts apply to the debit note, as the invoice is already past its due date. Realized currency differences are calculated for the period between the date on which the invoices were factored and the debit note date and posted to the Contingent Liability account and the Invoices Factored account. For invoices that are reopened without any amount being repaid or settled, ERP LN only creates a correction document and links it to the open entries. ERP LN makes a entry to reverse the entries to the Contingent Liability account and the Invoices Factored account. Related topics Factoring Factoring without recourse Factoring - receipts |