This guidance advises on how to set up factoring and report on it within Tally. Although our report is titled HSBC factoring it can be used for other factoring services.
To deal with Factoring in Tally you should setup a new bank account for use with factoring. Do this by going to Bank > Add a New Bank Account. You only need to worry about three fields here:
- Account Name – Give this account a unique identifying name, i.e. “Factoring Account".
- Starting Date – the starting date should be before the first transaction, i.e. 01/01/1970.
- Starting Balance – This should be 0.00.
When ready, click Update.
Recording Sales & Payments
When recording payments against invoices, under the payment details section of the invoice use the bank account drop down to select your new factoring account. Payments will now be recorded as going into this account. When you receive funds from the Factoring company you should transfer money from that account to your main account. To do this, go to Bank > Transfer Money Between Accounts. On this screen:
- Date – Enter in the date that the amount was transferred from the factoring company to yourself.
- Amount – Enter in the amount withdrawn or transferred.
- From – This will be the factoring account.
- To – This will be your business account where you received the money.
- Comment – to make this easy to reconcile you can enter in something like ‘Factoring Payment January 2013'.
When ready, click Create Transfer. To record fees for the factoring, go to Bank > View/Add Transactions button next to the factoring account. Use the add a transaction function at the top to add a new money out transaction with the type of bank charge for the amount of the fees.
If you use HSBC for Invoice Factoring you can generate the required files direct from within Tally. You’ll first need to enter your customers client numbers by going to Settings > Customer Custom Fields. Name the first field Client Number and click Update. You will now be able to go to Customers > Select the customer > Other Info > Enter in the customers client number. You can now run the HSBC factoring report by going to Tools & Reports > Income Reports > HSBC Factoring. Using the fields here:
- Client Number - This is your client number for HSBC.
- Password - This is your password for HSBC Factoring Service.
- Start Date.
- End Date.
When ready, click Create Text File. This will download the required file to your computer for submission to HSBC.