Assignment Of Accounts Receivable

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It is not uncommon for a notice of assignment of accounts receivable to contain seemingly innocuous and boilerplate language along the following lines: Please make the proper notations on your ledger and acknowledge this letter and that invoices are not subject to any claims or defenses you may have against the assignee.

Typically, the notice of assignment of accounts receivable is directed to an accounting department and is signed, acknowledged and returned to the factoring company without consideration of the waiver of defenses languages.

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In specific assignments, the entries are more complex since the receivable includes accounts that are explicitly identified.

In this case, Company A has pledged 0,000 of accounts in exchange for a loan of 0,000.

A party seeking capital assigns its accounts receivable to a financing or factoring company which advances that party a stipulated percentage of the face amount of the receivables.

The factoring company, in turn, sends a notice of assignment of accounts receivable to the party obligated to pay the factoring company’s assignee, i.e. While fairly straightforward, this three party arrangement has one potential trap for account debtors.

The assignment of accounts receivable journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of accounts receivable assignment.

In each case the assignment of accounts receivable journal entries show the debit and credit account together with a brief narrative.

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