How do I account for invoice finance?
In general, accounting for the finance transactions should be completely separately to the invoices.
e.g., if we assume a £1,000 invoice with a £850 advance and a fee of £20
- When an advance payment is made, Dr Cash 850, Cr. Satago Finance account 850 (BS)
- If Satago receives the payment from the customer directly, we’d take our fee and return the balance of £130 to the client. At this point the client would mark the original invoice as paid and reduce the amount in the Satago Finance account:
- Dr Cash 130, Dr Satago Finance account 850, Dr Satago Fees 20 (P&L), Cr Account Receivable 1000
- If the client receives the payment directly, and pays Satago back the advance amount plus fees:
- Dr Cash 1000, Cr Account Receivable 1000 to remove the invoice