How to process our factoring company payments

Accounting
1

Hi,

We use a factoring company to pay some invoices. So i have set up our factoring company as a merchant bank account, and then i mark the invoices as paid in to that bank account. (Same as you would with PayPal and so on.)
The problem we have, is we only get paid 90% of the invoices until our clients pay our factoring company.
Because i have marked these all as paid, we have a VERY high VAT bill bill for money we havent actually had yet.

I hope someone has a solution for this. Is there a way to mark these invoices as 90% paid?

Thanks :slight_smile:
James

2

Are you doing vat on cash or accrual basis?

3

Hi
Sorry for the late reply.

I am doing VAT on Cash

Thanks
James

4

What sort of vat scheme are you on?

5

We are on the normal cash accounting scheme.

Thanks

6

ideally you should book payments you actually received from either customers or factoring company

7

Thanks for your time FaradayKeynes.