Novikova N.E.Financial University under Government of Russian Federation, Moscow, Russian Federation nnemw@mail.ru
Novikov V.A.Financial University under Government of Russian Federation, Moscow, Russian Federation ludy@yandex.ru
Importance Factoring is one of business lending transactions, including bank lending. Factoring transactions imply exchanging accounts receivable for money ahead of schedule, thus allowing creditors to complete the repayment schedule. Objectives The research summarizes approaches to accounting of business facts arising from factoring transactions, and presentation of accounts receivable and payable in financial statements. Methods Based on general scientific methods, we analyzed the specifics of factoring, its types and formation of accounts receivable and estimated reserves in the Balance Sheet. Results Having examined the relationships between the borrower and the bank (factoring company) concerning the exchange of accounts receivable for money, types of factoring contracts, we concluded they referred to the entire set of services, which were stipulated in contracts. However, they do not necessarily provide for the right of recourse, i.e. the factor's entitlement to require money back. In this case there arise the need to account the risk of estimated reserve in the amount of possible loss. The reserve, which is presented as a separate line of the Balance Sheet, changes accounts payable in financial statements. Conclusions When the factoring contract provides for the right of recourse, the assigned accounts receivable should be left in accounting records, without posting them to other expenses, until they are repaid, and estimated liabilities for the factoring value should be concurrently recognized, i.e. the amount of possible loss.
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