Aug 262011
Recourse Factoring calls for “Separate Presentation” in the balance sheet of a company’s statutory accounts.
The liability to the Factor is shown as a short-term creditor, because in effect it is a loan from the Factor.
The Sales ledger debtors are shown under “current assets” in the usual way.
The Factoring fees and discount fees go through the Profit & Loss account (similar to how bank charges are treated).
The accounting policy for debt factoring will need to be disclosed in the notes.
This topic crops up from time to time, most recently on Accounting Web.
