Re: [GNC] Selling an unpaid invoice to another business at face value?
On 12/6/2023 8:40 PM, Adrien Monteleone via gnucash-user wrote: The amount owed stays in AR. Who owes it is what changes. Look, this isn't really about gnucash. And selling of A/R is far from unusual. But a list helping people use gnucash isn't the place to discuss "factoring" from scratch. But I will say this much. If a business sells some or all of its A/R then it should be obvious that for THAT business those amounts no longer receivable but already received. Those become the business of the factor to collect. The factor would need to have the invoices. I assume we are NOT talking about the unusual situation where you are keeping the books for both the first business and the second (separate entities, separate books). Michael D Novack PS --- In addition to sale to a factor, we also can have sale of "bad debt" to a collection agency. Again, once sold no longer receivables of the business. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Selling an unpaid invoice to another business at face value?
On Thu, Dec 07, 2023 at 01:01:27AM +, Morgan Read wrote: > Hi Andrew, Hey. :) > Many thanks for coming back. > > I think perhaps that in an attempt at brevity, I assumed too much in my > example and perhaps wasn't as clear as I might have been. There are three > entities in my example, but in yours there are 5. Perhaps the confusion Nah. There are 3: CompanyA (that is owed and wants to sell), CompanyB (that wants to be owed and is willing to buy) and CompanyD (that owes). > 2/ Three entities - 'I', Entity-A for whom I do work and Entity-B to whom I > sell the right to collect the debt for the work done for Entity-A; So for my examples Entity-A is CompanyD and Entity-B is CompanyB. You are CompanyA I believe. > 3/ Two invoices - my (I's) invoice to Entity-A (Invoice-A) for the work done > and my (I's) invoice to Entity-B for the sale of the right to collect the > above debt; > 4/ Invoice-A is generated on the completion of the work for Entity-A, and > placed in the shoe box marked 'invoices due'; Invoice-A is invoiceX. > 5/ Invoice-B is generated on the sale of right to collect the debt to > Entity-B; Invoice-B is invoiceY. > 6a/ On the generation of Invoice-B a copy is stapled to Invoice-A to > represent the discharge of the right to collect the debt on Invoice-A and > its transfer to Invoice-B - and placed in the shoe box marked 'invoices not > due'; This stapling generates invoiceZ which is now (re-)issued to CompanyD. > 6b/ Invoice-B is placed in the shoe box marked 'invoices due' InvoiceZ would be as it now represents what CompanyD owes to CompanyB. It also references invoiceX as the original invoice (this would be the stapling). > So, the question is - how do I effect 1 to 6 above in gnucash, bearing in > mind that some things may have been missed and I'm not sure where the > transfer from Accounts Receivable might go? Does my clarification above clarify my procedure below and help now? :) CompanyA's AR is fulfilled by CompanyB. CompanyB now gets an entry (invoiceZ) in its AR to be fulfilled by CompanyD. Just realised that invoiceX is still in CompanyA's AR. Not sure how to appropriately deal with it and it's well past midnight so I don't think I will come up with something right now. :) I may also be overthinking it without realising cos it's well past midnight. :) > The right to collect on an invoice is sold to debt collectors all the time - > I'm just a bit surprised there isn't a straight forward answer to > representing that transaction in gnucash. I think people are (rightfully) worried about the legal angle. Me too somewhat but I believe it is understood that I'm only giving ideas on how to use software in a vacuum and that you realise that it's down to you to figure out if what I am saying is legal, correct and proper in your corner of the planet. Hence my line about being a noob, etc. :) > On 06/12/2023 12:48 am, AP wrote: > > On Tue, Dec 05, 2023 at 04:19:01PM +, Morgan Read via gnucash-user > > wrote: > ... > > > > So wouldn't this be: > > > > * you have an invoiceX from CompanyA to CompanyD > > * CompanyY creates invoiceY referencing invoiceX to CompanyB Ooops. CompanyA not CompanyY. > > * CompanyB pays CompanyA for invoiceY thus acquiring invoiceX > > * CompanyB creates invoiceZ referencing invoiceX (that it now owns) to > > CompanyD > > > > End result should be CompanyA's books being balanced and CompanyD's books > > being > > unbalanced to the tune of invoiceX and thus requiring payment from CompanyD > > to > > balance. > ... Andrew ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Selling an unpaid invoice to another business at face value?
The amount owed stays in AR. Who owes it is what changes. How you do that is not specific to GnuCash. You will likely have to employ intermediary accounts, but what those should be, are up to you and your needs/requirements. Perhaps ask a local CPA. Regards, Adrien On 12/6/23 7:01 PM, Morgan Read via gnucash-user wrote: Hi Andrew, Many thanks for coming back. I think perhaps that in an attempt at brevity, I assumed too much in my example and perhaps wasn't as clear as I might have been. There are three entities in my example, but in yours there are 5. Perhaps the confusion arises because the 'I' in my example is an active party, whereas the 'you' in yours seems to be a passive observer. I thought it might help to fill in some of the gaps in my example - there may be well be more:- 1/ Two shoe boxes - one marked 'invoices due' the other marked 'invoices not due'; 2/ Three entities - 'I', Entity-A for whom I do work and Entity-B to whom I sell the right to collect the debt for the work done for Entity-A; 3/ Two invoices - my (I's) invoice to Entity-A (Invoice-A) for the work done and my (I's) invoice to Entity-B for the sale of the right to collect the above debt; 4/ Invoice-A is generated on the completion of the work for Entity-A, and placed in the shoe box marked 'invoices due'; 5/ Invoice-B is generated on the sale of right to collect the debt to Entity-B; 6a/ On the generation of Invoice-B a copy is stapled to Invoice-A to represent the discharge of the right to collect the debt on Invoice-A and its transfer to Invoice-B - and placed in the shoe box marked 'invoices not due'; 6b/ Invoice-B is placed in the shoe box marked 'invoices due' In gnucash, I imagine that the transfer of Invoice-A from shoe box 'invoices due' to shoe box 'invoices not due' is represented by a transfer from Accounts Receivable to somewhere else - but, I'm not sure where. To keep it simple, the right to collect is not sold at a discount. So, the question is - how do I effect 1 to 6 above in gnucash, bearing in mind that some things may have been missed and I'm not sure where the transfer from Accounts Receivable might go? The right to collect on an invoice is sold to debt collectors all the time - I'm just a bit surprised there isn't a straight forward answer to representing that transaction in gnucash. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Selling an unpaid invoice to another business at face value?
Hi Andrew, Many thanks for coming back. I think perhaps that in an attempt at brevity, I assumed too much in my example and perhaps wasn't as clear as I might have been. There are three entities in my example, but in yours there are 5. Perhaps the confusion arises because the 'I' in my example is an active party, whereas the 'you' in yours seems to be a passive observer. I thought it might help to fill in some of the gaps in my example - there may be well be more:- 1/ Two shoe boxes - one marked 'invoices due' the other marked 'invoices not due'; 2/ Three entities - 'I', Entity-A for whom I do work and Entity-B to whom I sell the right to collect the debt for the work done for Entity-A; 3/ Two invoices - my (I's) invoice to Entity-A (Invoice-A) for the work done and my (I's) invoice to Entity-B for the sale of the right to collect the above debt; 4/ Invoice-A is generated on the completion of the work for Entity-A, and placed in the shoe box marked 'invoices due'; 5/ Invoice-B is generated on the sale of right to collect the debt to Entity-B; 6a/ On the generation of Invoice-B a copy is stapled to Invoice-A to represent the discharge of the right to collect the debt on Invoice-A and its transfer to Invoice-B - and placed in the shoe box marked 'invoices not due'; 6b/ Invoice-B is placed in the shoe box marked 'invoices due' In gnucash, I imagine that the transfer of Invoice-A from shoe box 'invoices due' to shoe box 'invoices not due' is represented by a transfer from Accounts Receivable to somewhere else - but, I'm not sure where. To keep it simple, the right to collect is not sold at a discount. So, the question is - how do I effect 1 to 6 above in gnucash, bearing in mind that some things may have been missed and I'm not sure where the transfer from Accounts Receivable might go? The right to collect on an invoice is sold to debt collectors all the time - I'm just a bit surprised there isn't a straight forward answer to representing that transaction in gnucash. Many thanks. M On 06/12/2023 12:48 am, AP wrote: On Tue, Dec 05, 2023 at 04:19:01PM +, Morgan Read via gnucash-user wrote: ... So wouldn't this be: * you have an invoiceX from CompanyA to CompanyD * CompanyY creates invoiceY referencing invoiceX to CompanyB * CompanyB pays CompanyA for invoiceY thus acquiring invoiceX * CompanyB creates invoiceZ referencing invoiceX (that it now owns) to CompanyD End result should be CompanyA's books being balanced and CompanyD's books being unbalanced to the tune of invoiceX and thus requiring payment from CompanyD to balance. ... -- Morgan Read Grande Bretagne Em: OpenPGP_signature.asc Description: OpenPGP digital signature ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Selling an unpaid invoice to another business at face value?
Sorry Morgan, I didn't mean to exasperate you. What I meant by 'How would you do this on paper?', was, "Using Pen and Ink, How would you record this according to standard Accounting rules?" If you can do it with pen and ink, you can likely do it with GnuCash. So the question, for this list, is rarely, if *never*, "What should I do?" You should already know (or been otherwise professionally advised of) that answer, have already attempted to do so using GnuCash, have hit some sort of stumbling block, and then request assistance. We cannot provide accounting or legal advice here. Even if some of these users are officially qualified to do so, in their respective jurisdictions, and even if their jurisdiction matches yours, this is not the proper forum for such advice. But once you have that answer, we can help with the mechanics of the software if you can't figure it out on your own. Your attempted goal still isn't clear. As I noted, originally in your first post it appeared as if *you* were changing business entities and wanting to transfer debt owed by customers from one entity (which you were closing) to a succeeding entity. Now it appears that you want to 'sell' a debt of a customer to some outside entity. How you go about these two is quite likely very different, but in any case, no one here can offer you that advice. You *must* obtain that advice from professional sources and then if you can't figure out how to implement that advice, ask here. When you ask, you already need to have been advised of the accounts to be involved and how the money is to 'flow' with the respective transactions. Regards, Adrien On 12/5/23 10:19 AM, Morgan Read via gnucash-user wrote: Thanks Adrian, All I'm attempting to discover is how - in gnucash - can I use what is owned by somebodyA to pay off what is owed by somebodyB? What is the procedure for using what is owed by one person to relieve another of the debt they owe? On paper, I would take the invoice to somebodyB, copy it and staple the invoice to the invoice to somebodyA and then place the invoice to somebodyA in the paid invoices shoe box. I'm sorry if I'm sounding exasperated . The legal position in the UK is that if I sell the debt from companyA to companyB then companyA will be liable for income tax or company tax (depending on whether the entity is a natural person or legal person - not that a natural person isn't also a legal person, but a limited company is only a legal person) on the returns they receive for the sale. CompanyB will also be liable for any returns it receives on the debt purchased. So, legally, there is a double taxation issue. Please can we leave the legal stuff out of this - I am a lawyer. It's not a legal question. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Selling an unpaid invoice to another business at face value?
On Tue, Dec 05, 2023 at 04:19:01PM +, Morgan Read via gnucash-user wrote: > Thanks Adrian, > > All I'm attempting to discover is how - in gnucash - can I use what is owned > by somebodyA to pay off what is owed by somebodyB? What is the procedure > for using what is owed by one person to relieve another of the debt they > owe? > > On paper, I would take the invoice to somebodyB, copy it and staple the > invoice to the invoice to somebodyA and then place the invoice to somebodyA > in the paid invoices shoe box. So wouldn't this be: * you have an invoiceX from CompanyA to CompanyD * CompanyY creates invoiceY referencing invoiceX to CompanyB * CompanyB pays CompanyA for invoiceY thus acquiring invoiceX * CompanyB creates invoiceZ referencing invoiceX (that it now owns) to CompanyD End result should be CompanyA's books being balanced and CompanyD's books being unbalanced to the tune of invoiceX and thus requiring payment from CompanyD to balance. The link between the invoices is kept via invoiceY and invoiceZ. Now I'm a newb to bookkeeping so hope that's both right and makes sense. :) Andrew ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Selling an unpaid invoice to another business at face value?
Thanks Adrian, All I'm attempting to discover is how - in gnucash - can I use what is owned by somebodyA to pay off what is owed by somebodyB? What is the procedure for using what is owed by one person to relieve another of the debt they owe? On paper, I would take the invoice to somebodyB, copy it and staple the invoice to the invoice to somebodyA and then place the invoice to somebodyA in the paid invoices shoe box. I'm sorry if I'm sounding exasperated . The legal position in the UK is that if I sell the debt from companyA to companyB then companyA will be liable for income tax or company tax (depending on whether the entity is a natural person or legal person - not that a natural person isn't also a legal person, but a limited company is only a legal person) on the returns they receive for the sale. CompanyB will also be liable for any returns it receives on the debt purchased. So, legally, there is a double taxation issue. Please can we leave the legal stuff out of this - I am a lawyer. It's not a legal question. Thanks, in hope, Morgan. I'm not sure that adds much clarity. Your initial description appeared to be that you had two business entities and you were transferring old debts owed to the first entity, to a new one - where you control/own both. Now it appears that you are 'selling a debt' owed by one entity, to another who will ultimately pay it. I'll refer you back to both Michael & David's reply in your linked thread: #1 - (Michael) How would you do this on Pen & Paper accounting? #2 - (David) This is a ultimately a legal question. Get that straight first. Then once you get official advice on how to record this, you have your answer, but if you are having trouble entering the transactions, we can help. We cannot advise you *how* this should be recorded. We can only help with the mechanics in GnuCash. - For a more general case of transferring the Receivables balance from one 'customer' to another, you would need to employ an intermediary account. Investigate the concept of 'Allowance for Doubtful Accounts' and 'Bad Debt Expense'. Regards, Adrien On 12/5/23 7:52 AM, Morgan Read via gnucash-user wrote: This is a follow up, with - I hope - a bit more precision and clarity - to this post: https://lists.gnucash.org/pipermail/gnucash-user/2023-August/108615.html I wish to sell an unpaid invoice made out to business A (old debtor) to another business B at face value - I raise an invoice to business B for the sale of the invoice with the value of the invoice made out to business A. How do I transfer the new amount now owed by business B (new debtor) to clear the debt of business A? I had thought that the process described clear an invoice against a credit note might be adapted to work. However, it does not seem possible to get more than one customer to show in the Process Payment window. -- Morgan Read Grande Bretagne Em: OpenPGP_signature.asc Description: OpenPGP digital signature ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Selling an unpaid invoice to another business at face value?
I'm not sure that adds much clarity. Your initial description appeared to be that you had two business entities and you were transferring old debts owed to the first entity, to a new one - where you control/own both. Now it appears that you are 'selling a debt' owed by one entity, to another who will ultimately pay it. I'll refer you back to both Michael & David's reply in your linked thread: #1 - (Michael) How would you do this on Pen & Paper accounting? #2 - (David) This is a ultimately a legal question. Get that straight first. Then once you get official advice on how to record this, you have your answer, but if you are having trouble entering the transactions, we can help. We cannot advise you *how* this should be recorded. We can only help with the mechanics in GnuCash. - For a more general case of transferring the Receivables balance from one 'customer' to another, you would need to employ an intermediary account. Investigate the concept of 'Allowance for Doubtful Accounts' and 'Bad Debt Expense'. Regards, Adrien On 12/5/23 7:52 AM, Morgan Read via gnucash-user wrote: This is a follow up, with - I hope - a bit more precision and clarity - to this post: https://lists.gnucash.org/pipermail/gnucash-user/2023-August/108615.html I wish to sell an unpaid invoice made out to business A (old debtor) to another business B at face value - I raise an invoice to business B for the sale of the invoice with the value of the invoice made out to business A. How do I transfer the new amount now owed by business B (new debtor) to clear the debt of business A? I had thought that the process described clear an invoice against a credit note might be adapted to work. However, it does not seem possible to get more than one customer to show in the Process Payment window. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
