Advances against future credit card sales

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I have received a cash advance from Liberis
If I can clarify how Liberis works. A loan is advanced based on anticipated future credit card sales. The loan is then repaid from the credit card payments at a fixed percentage.So for example if credit card sales on one day are £1000 this is paid by my credit card company directly to Liberis. Liberis then deduct a percentage and then transfer the net amount into my account. So if I take £1000 in credit card sales the net amount transferred to my bank account is £780. This continues until the loan is repaid at which time 100% of any future credit card sales is transferred to my account This is a relatively common way of raising short term finance and I would apppreciate your clarification on how this should be recorded Many thanks

It sounds like a loan the same as any other, just the way you’re repaying it is a bit different. I’d start by creating a “loan” type bank account for Liberis to represent the outstanding liability to them at any given time. The initial cash advance from them would then be a transfer from the loan account to your current account.

I presume you already have a “merchant” type bank account in QuickFile to track the card payments - payments from customers are paid into the merchant account, settlement payments to you are transfers from there to your current account. You can continue with this same workflow, with customer payments going in to the merchant bank account and the net settlement payments you receive from Liberis as transfers from the merchant account to your current account.

The repayment percentages taken by Liberis are then transfers from your merchant bank account to the Liberis loan account - you could enter these individually each day or you could do a lump sum transfer at convenient intervals, e.g. if Liberis send you a monthly statement.

And finally, any interest you are charged by Liberis is money out of the loan account tagged as an interest payment in the normal way using “something not on the list”.


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