Payables & Cash Management

Get Involved. Join the Conversation.

Topic

    Sivaraj Shanmugham
    Factor Arrangements - Best PracticeAnswered
    Topic posted September 11, 2019 by Sivaraj ShanmughamRed Ribbon: 250+ Points, tagged Payables 
    30 Views, 2 Comments
    Title:
    Factor Arrangements - Best Practice
    Summary:
    Supplier asking our AP team to send all their payments to Factor's bank account
    Content:

    Some of our Suppliers have factoring arrangement with the same bank. We are required to send payments for multiple vendors to the same factor's bank account. What is the best to accomplish this?

    1. Add Factor bank a/c to one of the suppliers and assign the bank account to other vendors who use the same bank/bank account ?

    2. Should we consider using the Third party payments functionality ?

    Thank you,

    Siva

    Best Comment

    Julien Dubouis

    Hi Siva,
    I would say it all depends of the way you create your invoices and if the factor is always paid. The main problem is that the bank account in itself is not an available field in ADFDI/FBDI/AP Installment webservice while the third party payer is, therefore :
    - if you create your invoices by interface, I would not advise to create a factor bank account and assign it to your normal supplier, unless the factor is always paid (because in that case you can make it the default bank account on your supplier)
    - if you create your invoices manually, both options are viable. Having it as a default bank account reduces the manual operations if the factor should always be paid

      Factor always paid Factor paid on selected invoices
    Invoices created manually Factor Bank account Both options viable. Both require manual operations.
    Invoices created by interface Both options viable. Factor Bank account preferred Third Party Payment

    Thanks

    Comment

     

    • Julien Dubouis

      Hi Siva,
      I would say it all depends of the way you create your invoices and if the factor is always paid. The main problem is that the bank account in itself is not an available field in ADFDI/FBDI/AP Installment webservice while the third party payer is, therefore :
      - if you create your invoices by interface, I would not advise to create a factor bank account and assign it to your normal supplier, unless the factor is always paid (because in that case you can make it the default bank account on your supplier)
      - if you create your invoices manually, both options are viable. Having it as a default bank account reduces the manual operations if the factor should always be paid

        Factor always paid Factor paid on selected invoices
      Invoices created manually Factor Bank account Both options viable. Both require manual operations.
      Invoices created by interface Both options viable. Factor Bank account preferred Third Party Payment

      Thanks

      • Sivaraj Shanmugham

        Thanks Julien! 

        Except some manual entry, all invoices are coming in via Invoice imaging or EDI. So, we will consider 3rd party payments. 

        Siva.