Recording Factoring/Miscellaneous Costs

Here's a scenario that explains how other Tai brokers handle this entry within Tai and their accounting system.

Scenario

• Shipper Invoice: $10,000
• Carrier bill: $7,500
• Factoring company terms:
  • 90% advance
  • 2% fee
  • Balance paid upon shipper payment

Step 1: Invoice Creation

• TMS records:
  • Sell (AR): $10,000
  • Buy (AP): $7,500
  • Gross Margin (in TMS): $2,500
• Accounting entry:
  • AR – Shipper: $10,000
  • Revenue: $10,000

Step 2: Carrier Bill

• Accounting entry:
  • Carrier Expense (COGS): $7,500
  • AP – Carrier: $7,500

Step 3: Factoring Advance (90%)
The factoring company advances $9,000 (90% of $10,000).

• Accounting entry:
  • Cash: $9,000
  • Due from Factor (Reserve Receivable): $1,000
  • AR – Shipper: $10,000 (offset since factor now owns it)

Step 4: Factoring Fee (2%)
When the shipper pays, the factoring company deducts 2% = $200.

• Accounting entry:
  • Factoring Expense: $200
  • Due from Factor: –$200

Step 5: Final Settlement
The factor remits the reserve minus the fee: $1,000 – $200 = $800.

• Accounting entry:
  • Cash: $800
  • Due from Factor: –$800

Final Result in Quickbooks or Accounting Software

• Cash received = $9,800
• Carrier paid = $7,500
• Net Profit = $2,300
• Gross Margin in TMS = $2,500 (shipment-level, before financing costs)
• Factoring Expense in accounting = $200 (appears separately as a financing cost)