Invoice Discounting

Invoice Discounting records a short term loan a bank gives you against unpaid customer invoices. Submitting it moves the chosen invoices out of Debtors into Accounts Receivable Discounted, a separate receivable head, so the balance sheet shows which debts are pledged. When the bank pays out, the Disburse Loan action posts the cash, the bank's charges and the loan liability; when the customers pay and you settle the bank, the Close Loan action reverses the loan and moves the receivable back. Three company accounts must exist first: Accounts Receivable Credit, Discounted and Unpaid, plus a short term loan account. Submitted records lock, so check the invoice list before you submit.

Cash received = Total of discounted invoices - Bank charges; Rs 36,160 - Rs 2,160 = Rs 34,000; Loan = Rs 36,160

1. 01Go to Accounts Setup > Company and fill the Invoice Discounting accounts and the short term loan account.
2. 02Go to Invoicing > Invoice Discounting > New and set the posting date and loan period.
3. 03Click Get Invoices, tick the unpaid Sales Invoices to pledge, and pick the bank account.
4. 04Enter the Bank Charges and Save; Submit moves the invoices to Accounts Receivable Discounted.
5. 05When the bank credits you, click Disburse Loan; the Journal Entry for cash, charges and loan posts.
6. 06After the customers pay, click Close Loan; the loan is cleared and the receivable returns.

Create under Accounts > Invoice Discounting, pick the invoices and bank; make the disbursement entry when funded and the closure entry on repayment. Submitted records lock.

Discount Rs 36,160 of invoices at a bank for Rs 34,000 cash now, with Rs 2,160 as bank charges.