How to apply the payment from Service Finance and how to handle the Finance fee

New Contributor III

Contributor III

Hi Julie731.  This process is a bit complicated, but it does work for us.  When we sell a financed job, we create a purchase order for the amount of the fee.  On this order, we add a non-inventory tracked item called "Finance Co Fee".  We code this item to charge cost of goods sold - other, but you can code it to a marketing expense if you treat these as marketing rather than COGS items.  NOTE that when you process this through as a bill, it will update your Quickbooks or Intacct accounts payable, so the bill should not be completed until the Service finance fee is paid.  When we get the finance company payment, we enter 2 payment entries.  The first is for the amount we actually get from Service Finance.  The second payment is set up as a "Finance Company Fee" in the payment types.  This payment type is coded as a journal entry going to an account we call "A/P - Finance Co clearing".  The amount of this payment is the fee amount, and the two payments together should zero out the invoice.  Finally, we go to our accounting package and enter a credit memo for the finance company.  This credit memo is charged to the "A/P - Finance Co clearing" account.  This will zero out both accounts payable and the clearing account, leaving the books properly charged.  Hope that answers you question.

Mike M CPA & Operations in KC, (go Chiefs)