Factoring is when a company sells some or all of its’ accounts receivable to another company at a discount.  That discount is usually a percent of the total amount.

That discount is an expense.

So what you need is an expense account called Factoring Expense.

In QB this can become a hassle to accomplish.  The amount written off (the discount amount) has to be applied to each invoice sold to the factoring company.

• 1. Bring up receive payments, select the customer and check mark the invoice.
• 2. At the top left, second block from the top enter the amount of money received, less that the amount due.  I would enter in the memo field that the invoice was factored.
• 3. When you do that a screen pops up asking what you want to do with the unpaid portion of the invoice – select “Write off extra amount” then click save.
• 4. A pop up window will appear asking you to select the account, select the Factoring Expense account you created.
• 5. Select a class if you are tracking by class, and hit OK/Save.