Processing Factor Company Payments

The Factor Payment Processing option allows you to identify a customer as a Factor. Once a customer is identified as a Factor, the system will allow you to apply checks from the company to any open invoices in the system (regardless of the Billto customer used on the invoice).

Factor Payment Processing is used to handle situations where you factor your receivables after they are created, and will receive payment for the invoices from a Factor company. Factor Payment processing can also be used when you have a very large amount of child customers for a single parent company and do not have the Parent Company for each child company defined in the Customer Master. The Factor Payment Processing option should be used carefully since it allows you to potentially pay an incorrect invoice when applying the checks for the Factor company.

Factor processing is accomplished by setting up the Company in the Customer Master file and setting the Type field of the record to "F". Once this is done, the user can apply a payment from a Type F company to open invoices from any other company in the system.

During Cash Application the system checks to see if the check company type is set to F. If the check company is a type F company, or if the check company is the parent of the company listed on the invoice, the operator can apply the payment to the invoice. If the check company is not a type F company or the parent of the invoice company, an error message is displayed and the operator is not allowed to process the invoice.

Once a customer is defined as a Factor, the system will allow you to apply checks from the company to any open invoices.  When Factor Company Payment processing is used, the Factor company is recorded in the AR Check record created by the system and the journal entries used to record the transaction tie the check to the individual invoices (and child companies), paid with the check.

1.  Confirm that the Daily Startup procedure has been performed.

2.  Select the Cash Application program from the Menu and verify or change the default information displayed in the program as required.

3.  Use the prompt button located next to the Account Window to select the Factor Company that the check was received from.  When the prompt button is pressed, the system activates the Customer Lookup, which allows you to find a customer record using any of several supported display and search sequences.

4.  Enter the Check Number, Amount, and the Currency to be used for the payment.

5.  Load the invoices being paid into the lower section of the Cash Application program.  When a Factor Company payment is being processed, the customer name in the check record is not the same as the customer name in the invoices being paid, and only the following options may be used to select the invoices being paid.

•      Use the Find an Invoice Button to activate the Invoices Lookup program, which allows you to display and search for open invoices using several different search and display sequences.

•      Use the Insert key to activate the Invoices Selection list, which allows you to display and search for open invoices using several different search and display sequences.

As each invoice number is selected, the system will verify that the invoice is for the company selected in the top section of the program or that the company in the top section of the program is identified as a Factor or a Parent of the company whose invoice is selected.  The invoice will then be loaded into the program or an error message will be displayed.

6.  Specify the payment amounts and any adjustment amounts for the invoices.   The Apply Line Button and the Zoom and Doublclick options can be used to specify the amount to be paid for each invoice, and any other adjustments that should be made to the invoice.

7.  Verify the payment has been completely applied (The To Apply Amount in the program is 0), and Save the transaction.  If there are any unapplied or overapplied payment amounts, a new document can be created to track the amounts prior to Save.  The documents will be created with the name of the Factor Company being processed.

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Writing off Invoice Balances during Cash Application