Factoring Companies Guidebook

Where the previous receipt to the sales ledger is refunded back to the Client.

Concerns

Frequent occurrence of refunds may indicate administrative problems with the Client, which could have implications for our ability to collect out in a gone concern situation.

They can occur due to duplicate payments by customers, which the Client may endeavour to hold on to and possibly offset against future orders.

Refunds may be indicators of the invoices, to which the receipts relate, not being assigned. Unallocated receipts on the sales ledger may indicate refunds which have not been assigned.

Potentially refunds may uncover previously unknown turnover or promotional rebates due to the customers, which they failed to deduct from their remittances.

Alternatively they may represent the repayment of previously unclaimed credits where the customer is no longer trading with the Client, which may be due to product quality.

Identification

Review the sales ledger for any unallocated credit balances

Determine from the Client whether any refunds are due to itself or customers from sales ledger receipts.

Determine from the Client the precise reason for any refunded receipts.