(1) Accounting treatment of factoring with recourse
At the time of transfer
Debit: Bank deposit (according to the amount actually received)
Financial expenses (according to the handling fee paid when handling factoring business)
Loans: short-term loans
If the goods sold by the enterprise are returned, please record.
Debit: main business income
financial expenses
Taxes payable-VAT payable (output tax)
Credit: accounts receivable
When due, if the buyer can pay the payment in full, then
Borrow: short-term loans
Credit: accounts receivable
If the bank fails to recover the payment due, the enterprise has the obligation to repay the corresponding expenses, because the bank has the right of recourse.
Borrow: short-term loans
Loans: bank deposits
(2) Accounting treatment of non-recourse factoring
Transfer time
Debit: Bank deposit (money actually received)
Non-operational expenditure
Other receivables (expected sales discounts and discounts)
Bad debt reserve (bad debt reserve from which creditor's rights receivable have been withdrawn in factoring business)
Financial expenses (factoring fees paid)
Credit: accounts receivable
Non-operating income
Returns and discounts on actual sales.
Debit: main business income
financial expenses
Taxes payable-VAT payable (output tax)
Credit: other receivables
(3) The accounting treatment of explicit factoring and implicit factoring is the same as that of recourse factoring and non-recourse factoring.
(4) Financing factoring is to obtain bank financing according to 80% of the invoice amount, and the remaining 20% accounts receivable will be settled with the supplier after the factoring company fully recovers the accounts receivable from the buyer. Its accounting treatment is based on the discounting of bills with and without recourse.
Debit: bank deposit (actually received monetary funds)
Financial expenses (the difference between monetary funds actually received and the value of accounts receivable)
Bad debt provision (bad debt provision that has been accrued)
Credit: accounts receivable (book value of accounts receivable)
Extended data:
Factoring business evolved from export to trade agency, and originated from British wool industry in14th century. At that time, British wool textiles were commissioned by professional agents. These agents sell goods to foreign buyers and guarantee the commercial credit of buyers to exporters. At that time, due to inconvenient transportation, foreign trade business activities were relatively slow.
Without the assistance of reliable foreign agents, any export enterprise can hardly succeed. In the18th century, some American agents gradually mastered the agency loan management needed to expand the domestic market by virtue of their high efficiency and abundant funds. Their status has gradually evolved from the former principal-agent status to an independent economic entity-the factor. Factors provide credit and credit management services for related commercial enterprises according to factoring contracts.
Through continuous development, modern factoring companies have been able to provide a package of services, including providing sellers with the buyer's credit investigation, commercial risk guarantee of 100% payment, accounts receivable management and financing. It is reported that the international factoring business turnover of 1990 has reached13.7 billion USD. Not only developed countries have factoring companies to carry out international business, but also some developing countries such as Mexico, ASEAN and Hungary have factoring companies to provide services for their import and export trade.
In practice, there are many different ways to operate factoring business. Generally (but under special circumstances), it can be divided into: recourse factoring and non-recourse factoring; Explicit factoring and implicit factoring; Discount factoring and maturity factoring
Discount of bills with recourse
Recourse factoring means that the supplier transfers the creditor's rights of accounts receivable to the bank (that is, the factor). After the supplier receives the payment, if the buyer refuses to pay or is unable to pay, the factor has the right to recover from the supplier and demand repayment of the prepaid monetary funds. At present, due to the principle of prudence, in order to reduce the possible losses in the future, banks usually provide customers with factoring with recourse.
Non-recourse factoring
On the other hand, non-recourse factoring is the risk that the buyer refuses to pay or is unable to pay. After the supplier and the factor carry out the factoring business, it is equivalent to transferring all the risks to the bank. Because the risk is too high, banks generally don't accept it.
ming factoring
Explicit factoring and implicit factoring are distinguished according to whether the factoring business is notified to the buyer.
Explicit factoring means that the supplier should immediately inform the buyer of the factoring situation when the creditor's rights are transferred, and instruct the buyer to pay the goods directly to the factor.
At present, the factoring business carried out by domestic banks is Ming factoring.
Hidden factoring business
Implicit factoring means that the buyer is excluded from the factoring business, and the bank and the supplier conduct the factoring business separately. After the expiration, the supplier asks for payment and then returns it to the factor. Suppliers can cover up their poor financial situation through secret agents.
It should be noted that China's contract law clearly stipulates that when a supplier transfers its own accounts receivable, it must be stipulated in the purchase and sale contract and the buyer must be informed.
Discount factoring
Discount factoring, also known as financing factoring, means that when the exporter gives the bill representing the accounts receivable to the factor, the factor immediately provides the exporter with prepayment financing of no more than 80% of the accounts receivable, and the remaining 20% of the accounts receivable is settled after the factor collects all the payment from the debtor (importer). This is a typical factoring method.
Maturity factoring
Maturity factoring means that the factor does not provide financing to the exporter when receiving the documents submitted by the exporter (such as sales invoices representing accounts receivable), but pays the payment to the exporter after the documents expire. Whether or not payment can be received at that time, the factor must pay the money.
References:
Baidu Encyclopedia: accounting entries, Baidu Encyclopedia: factoring business