Factoring Method

When you use the factoring method to process encashments, customers remit the payment for their invoices to an encashment company, which then processes the payments and invoices. You receive the payment for the invoices, minus a predetermined commission, from the encashment company.

To process encashments using the factoring method, you write off the receipts that you know will be paid by the encashment company using the receipts entry programs.

See "Understanding Invoice Match with Write-Off (TI Codes 10 and 15)" in the JD Edwards EnterpriseOne Applications Accounts Receivable Implementation Guide.

You must set up a reason code (user defined code 03/AR) and a general ledger account for the receipts that you plan to write off for encashment. The reason code that you associate with the receipts determines which general ledger account that the system debits when you post the receipts.

You set up the reason codes in the automatic accounting instructions (AAIs). For example, you set up AAI item RAxx (where xx is the two-character reason code) to associate the reason codes to the general ledger accounts.