Supply Chain Finance (SCF)
Faster payments for suppliers and better deals and reliable deliveries for buyers. It's a win-win situation. A key for SCF is ensuring the optimal accounting classifications within GAAP. By seeking proper guidance from our team at VKR Global, companies can leverage SCF's potential while mitigating risks and ensuring accurate financial reporting.
Our team at VKR Global are ready to help. Please contact us by completing the form below. Looking forward to catching up with you soon.
Purchase Agreed and Invoiced:
Debit: Purchases Ledger (Similar if GIT)
Credit: Accounts Payables from Supplier (amount invoiced from the Supplier)
Reverse Factoring | Derecognition of Payables:
Debit: Accounts Payables from Supplier (amount invoiced from the Supplier)
Credit: Purchases Ledger (Similar if GIT)
Recognition of new liability Agreed and Invoiced (either Operating i.e. Trade or Financing:
Debit: Purchases Ledger (Similar if GIT)
Credit: Accounts Payables or Finance Liability from Financial Institution
Factoring Fee
Debit: Factoring Fee Expense to Financial Institution
Credit : Accounts Payable or Finance Liability (to Financial Institution)
If a fee is charged by the financial institution. As the initiator of the reverse factoring transaction and the beneficiary of early payment discounts, the buyer usually shoulders the cost of the factoring fee. This fee compensates the financial institution for assuming the payment risk and advancing funds to the supplier.
Discount on Payables
Debit: Discount on Payables
Credit : Accounts Payable or Finance Liability (to Financial Institution )
If the amount paid from the financial institution is less than the original invoice amount
Goods Delivered:
Debit: Inventory (Balance Sheet)
Credit: Purchases Ledger (Similar if GIT)
Goods Sold:
Debit: COGS (P&L)
Credit: Inventory (Balance Sheet)
Debit: Accounts Receivables
Credit: Sales
Purchase Invoice Paid by Buyer to Financial Institution:
Debit: Accounts Payables or Finance Liability
Credit: Cash or Bank
Sales Invoice Received from Customer:
Debit: Cash or Bank
Credit: Accounts Receivables
