How to book invoice purchases? – Complete guide for companies using factoring

Selling invoices has become one of the most effective methods for companies that want to strengthen their liquidity quickly without taking out loans. Regardless of whether you use invoice purchasing, factoring or invoice financing, the same question arises: how do you book invoice purchasing correctly? Here we go through everything step by step.

What does invoice purchase mean?

When a company chooses to sell an invoice to a factoring company, it means that the company gets paid directly, while the factoring company takes over the risk and administration. It is common for companies that want to improve cash flow, avoid waiting 30–90 days for payment, reduce credit risk or outsource claims and reminder management. Therefore, invoice purchasing is a central part of modern factoring.

How do you post invoice purchases?

The accounting depends on whether you use invoice purchasing without recourse or invoice purchasing with recourse.

Invoice purchase without recourse

Example: 

Invoice 100,000 SEK 
Factoring fee 3000 SEK 
Amount paid out 97,000 SEK

Accounting: 

1510 Accounts receivable debit 100,000 
3041 Sales credit 100,000 
1930 Bank debit 97,000 
6064 Factoring fees debit 3000 
1510 Accounts receivable credit 100,000

Here the account receivable is zeroed because you no longer own it.

Invoice purchase with recourse

Accounting: 

1510 Accounts receivable debit 100,000 
3041 Sales credit 100,000 
1930 Bank debit 97,000
2840 Factoring credit credit 97,000 
6064 Factoring fees debit 3000

When the customer pays, you settle the debt with the factoring company.

Frequently asked questions about accounting for invoice purchases

Do you need to book accounts receivable? 

Yes, the account receivable is booked as usual but is immediately zeroed when the invoice is sold.

Advantages of selling invoices

Selling invoices is an effective way to get quick liquidity, reduce credit risk, avoid reminders and debt collection, and focus on core business. That's why factoring is one of the most used financing solutions among Swedish companies.

Summary

Accounting for invoice purchases is easy when you know how it works. Regardless of whether you use factoring, invoice financing or sell invoices directly, the principles are the same: the receivable is booked, the factoring fee is expensed and the payment is booked to the bank.