How to process our factoring company payments


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:

Are you doing vat on cash or accrual basis?

Sorry for the late reply.

I am doing VAT on Cash


What sort of vat scheme are you on?

We are on the normal cash accounting scheme.


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

Thanks for your time FaradayKeynes.