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Version: 8.0

Factoring

Introduction​

Factoring allows you to access cash quickly to finance your growth, investments or working capital requirements. It allows you to optimise your cash flow without waiting for your customers to pay your trade receivables.

In Axelor, there are four important concepts:

  1. Invoices known as factored invoices, these invoices will be identified so that they can be transferred to the factoring company.

  2. The factor: a factor is a bank that will buy the company's invoices at a certain rate.

  3. The subrogated release: this is the contractual document between the company and the factor listing the invoices that have been transferred.

  4. Notification: this refers to a process whereby the factoring company informs the debtor (the seller company's customer) of the change in ownership of the invoice. This takes place after the company has transferred its unpaid invoices to the factoring company.

Factor configuration​

Access : Applications config → Apps management → Accounting, configure → tick the “Manage factors” option.

  1. Manage factors : first, factor management must be activated in the Accounting App.

  2. Accounting configuration - Company: you then need to define the factor's debit and credit accounts in the accounting configuration. Click on the company file to access the accounting settings.

  3. Factor: in the accounting settings, in the Accounting tab, find the “Factor” section. Here you can set up the “Factor debit account” (for example, 467100) and the “Factor credit account” (for example, 467200). The receipt will be accounted and transmitted, which will generate entries directly to these accounts.

  4. Receivables recovery - Factor: click on the “Receivables recovery” tab and configure the factor. In the Factor field, select a third-party factor.

caution

Please note that the factor must be configured beforehand to be able to select it as a third-party factor.

In order to do so, open a partner file and mark the checkbox “Factor”. Therefore, the partner becomes a factor (access : Application Config → Referential → Partners).

  1. Factored: define a customer as “Factored” (this can also be done from the customer file). Access : Sales → Customer → Customer tab → tick the “Factorized customer” box.

Generate a subrogated release​

Access : Accounting → Debt recovery → Factoring → Subrogated release

You will be able to select the invoices of your factorized customers in the “Subrogated Release” menu and thus be able to send them to your factor, until the accounting entries are generated, while waiting for the notification of payment.

  1. Open a new subrogated release file.

  2. Company: the system automatically indicates the company.

  3. Factor: the system automatically indicates the factor.

tip

The factor is unique for each company.

  1. Retrieve invoices from factorized customers: click on the “Recover invoices from factored customers” button (you must first have invoices).

  2. Release details: once you have retrieved the invoices from the factored customers, the invoices will appear in the “Release details” table.

  3. Save the changes you have made.

  4. Transmit release: click on the “Transmit release” button to send the receipt.

  5. Sequence number: following transmission, the system will assign a sequence number to the release.

  6. Transmission date: a transmission date will then appear on the subrogated release form. The subrogated receipt must be sent on this date (in PDF / CSV format). Use the “Print / Export” button to do this.

  7. Print/export: click on the print/export button. Here you can print/export the document for the factor (only available from “Release transmitted” status).

  8. Enter release in the accounts: once you have sent the release, you can account it. Click on the “Enter release in the accounts” button to your right. Once you have done this, the release will change its status to “Release accounted”.

  9. Accounting date: this date is updated once you have posted the receipt.

  10. Comments: add comments to ensure traceability.

  11. Total amount remaining: if you have several invoices, and the customers have only paid a part of them, you will be able to consult the total amount remaining on the subrogated release.

  12. See move lines: click on this button to view the entry lines for your subrogated release.

Validation of the subrogated receipt & notifications​

Notifications​

Access : Accounting → Debt recovery → Factoring → Notifications

The Notifications menu is used to indicate that the client has returned to recover the debt from the factor.

On the record of a notification you will find :

  1. Company and factor are filled in automatically.

  2. Payment date: the payment date can be set automatically, but you can change it.

  3. Subrogated release: in this field, select the subrogated release. The invoice that is attached to this subrogated release will then appear in the “Invoices” table.

  4. If necessary, select the type. The type might be predetermined.

  • Payment to factor: the customer's payment to the factor is made before the debt is returned by the factor. In other words, the factor's payment has not been recorded in the application. Consequently, the ‘payment to factor’ type is used to create a D.O. to inform that the subrogated receipt sent to the bank has been paid. There is a lettering operation which takes place automatically when you validate the notification, which will generate an entry on the account of the third party customer.

  • Payment to the factor after return from the factor: here, you have the return of the receivables by the factor (the factor informs you that he is going to pay you), so a D.O. is made internally which will be used to generate a payment entry from the factor to the company. A direct payment is made from the customer to the factor, and then the customer pays the company.

Scenario depending on the selection chosen:

Customer pays factor before factor returns debt :

  • Invoice: debit to 411.

  • Receipt: debit 46711 and credit 46712.

  • Payment notification: debit from 46712 and credit from 411. Payment by customer to factor after return of receivable by factor :

  • Invoice: debit from 411.

  • Receipt: debit 46711 and credit 46712.

  • Return of receivables by factor: Manual OD: debit 46712 and credit 46711.

A. Customer payment to factor: debit 46711 and credit 411

OR

B. Direct payment from customer to company: debit 512 and credit 411.

  • With this configuration, the system will not letter the 467 entries after validation of the notification.

  1. Validate: after validating the notification, you can check whether or not the accounting entries (moves in AOS) have been lettered.

  2. See move lines: following validation, an entry line will be generated. You can click on the entry and view the information. For example, you can see the payment to the third-party account (the customer has paid the factor). The factor has been lettered. The system has automatically accounted the payment to the factor's account.

  3. Release cleared: the release changes status to “Release cleared”.