When a company starts to use external financing to finance all or some of their sales invoices, the company should first make a contract with one financing company. After this the company should study how the financing company is going to receive the financed sales invoices and how the receivables will be paid.
The process of using external financing will be discussed in this article. More detailed and technical instructions can be found here.
The process of using external financing
The process is divided into five steps:
1. The company and financing company should make an agreement of the use of external financing.
2. The bank connections should be opened if the financing company wants to pay the receivables to a specific bank account.
3. Activating external financing in Procountor and inserting the bank account information to Procountor.
4. Sending receivable information to financing company.
5. Paying the receivables to company's bank account.
Step 1. Contract with the financing company
Company which is considering to use external financing to finance some or all sales invoices should first familiarize oneself with the financing companies. After this it should choose the best suitable financing company to make a contract with.
The following questions should be asked from the financing company:
- How does the financing company want to receive the receivable information when the financial software is Procountor?
- How does the financing company pay the receivables to the company?
- Does the financing company pay only a percentage of the receivables first and then afterwards the rest of the invoice?
- Does the financing company take its fee from the paid sum of the receivables or does it send a purchase invoice?
- Does the financing company pay each receivable invoice separately of in a lump sum?
- Is there a need to open an other bank account for the paid receivables?
Step 2. Opening the bank bank account and filling the information to Procountor
Open an additional bank account for the receivables from the financing company if necessary. Fill in the bank authorization to get the bank statement from the bank to Procountor. After this fill the ban account number to Procountor.
Read more about bank connections here.
Step 3. Activate external financing settings in Procountor
In Procountor Management > Company info > Usage settings there is a section External financing settings.
- Fill in the external financing settings.
When the settings are on, go to Management > Company info > Financing agreements and fill in the financing agreement to the view.
- Read more detailed information about the view here.
When the settings are on in Procountor select the financing agreement to customer's information so that the financing agreement will be lifted automatically to all the invoices that are made to the customer.
- If the external financing is only used occasionally the agreement can be selected invoice by invoice.
Step 4. Sending receivable information to financing company
When the agreement is made with the financing company the customer should ask how the sales invoice information is sent to the financing company. The information can be delivered by using Finvoice, API or by delivering the invoices by had.
- See more detailed information about the delivery here.
- If the invoices are sent automatically to the financing company, Procountor will technically send the invoice data when invoices are Approved.
- After clicking Send button the invoice data will be sent to the customer.
Step 5. Paying the receivables to company's bank account
The company should discuss how receivables are paid to company's bank account when the contract is done with the financing company. After the bank account is opened and the bank statements are coming to Procountor the company can keep track of the receivables in Procountor.
Please note that Danske Bank delivers factoring invoices' reference payments as so called S file, which is not supported in Procountor. This means that, when the factoring company is Danske Bank, reference payments concerning factoring invoices can't be imported in Procountor and factoring invoices will not be automatically allocated as paid.