Set up and run the financing fees/buydown workflow

Overview

The financing fees/buydown workflow lets you record the fee a financing company charges when a customer finances a job. You set up the general ledger accounts, payment types, and pricebook items once, then follow a repeatable process each time a financing company pays you less than the financed amount. This keeps your revenue, financing fee expense, and job costing accurate while hiding the financing details from the original customer.

Things to know

• When you create the financing task, decide whether it should be commissionable based on your company practices. To avoid duplicating commission, make the task non-commissionable. For more, see Add materials to Pricebook.

• QBO only: After export, the credits that were created must be manually applied to the invoice. Go into the invoice for the original customer, choose to add payment, check the Journal Entry shown under Credits, and click Save and Close. Repeat for the invoice for the financing customer.

• If you reconcile your bank statement by batch, do not batch and export the Finance Fee and financing-company payment types with other payments—they will make your batches not match your bank.

• The Finance Fee and financing-company payment types can be batched individually or with each other, but not with other payment types.

Step 1: Set up a financing/buydown workflow

Set up the following before processing any financing payments.

Create the general ledger accounts

You need these general ledger accounts, or create new general ledger accounts. For more, see Set up general ledger accounts.

• Financing Fees (expense account). You can create one GL account per financing company (for example, GreenSky Financing Fees) or one general financing fees account.

• Clearing Account (other current liability account).

Create the payment types

To create a new payment type, go to Settings > Invoicing > Payment and Invoice Types and click Add. Create the following:

• Payment type named Finance Fee:        

  • Export as: Journal Entry

  • Attributes: None

  • Map to: the finance fee expense account you created

  • Create more than one if you made multiple finance fee expense accounts

• Payment type named after your financing company (for example, GreenSky Financing):        

  • This is a customer-facing payment, so be mindful of the name

  • Export as: Journal Entry

  • Attributes: None

  • Map to: the Clearing Account

  • Create more than one if you work with multiple financing companies

Create the pricebook service and customer records

1. Add a service to your Pricebook named Financing Task. Set its general ledger account to the Clearing Account. To add a service, click Pricebook > Services > + Add Service. Set this task to non-commissionable to avoid duplicating commissions.

2. Create a new customer for each financing company. For more, see Create a customer record.
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Step 2: Process financing company payments

1. Create an invoice and add a payment for the full amount financed.        

   • Payment Type: your financing company payment type (for example, GreenSky Financing). This is the payment type mapped to the liability account.

   • Amount: the full amount financed

        

2. Create an adjustment invoice by clicking Add an Adjustment Invoice, then click Update Invoice Details. Change the Bill To field to the financing company. This hides the whole adjustment invoice from the original customer. Click Save. 

3. Click Add a Task.        

   • Task Name: Financing Task (created in Step 1)

   • Unit Price: the amount that was financed (same amount used in step 1)

4. Export the invoice. You can export it before payment from the financing company is received. 

5. When payment is received from the financing company, go to the financing company customer page and click Collect Payment.        

   • Amount: the amount received from the financing company (this is less than the amount financed)

   • Payment Type: however the financing company paid you

   • Apply to the appropriate invoice, then click Save.

        

6. Receive a second payment for the remaining amount. If needed, click Collect/Apply Payment again.        

   • Payment Type: Finance Fee

   • Amount: the remaining amount

        

Step 3: Track the financing fee as a job cost (optional)

Complete this step if you want the financing fee to appear as a cost on your job costing report.

Set up the material

Go to Pricebook > Materials > + Add Material:

• Name: GreenSky Financing Fee (or Financing Fee, or the name of another financing company)

• General Ledger Account: the Financing Fee expense account created in Step 1

• This is a non-inventory, non-chargeable material

Add it to an adjustment invoice

Create an additional adjustment invoice and add the material you created:

• Cost: the financing fee amount

• No price

This lets you see the cost associated with the fee on your job costing report.

Want to learn more?

• See Set up general ledger accounts

• See Create an adjustment invoice