Accounting
Nothing posts to your book because a machine was fairly sure.
Written for the controller and the cash application clerk. Between a payment arriving and a client’s balance being right sit a remittance advice in five formats, a short pay nobody explained, a reserve that should move, a fee that accrued yesterday, and an examiner who will ask about all of it in March.
FactorFox proposes. A person applies. The distinction sounds procedural until the first time a confident automatic posting takes a week to unwind.
Why this exists
Cash application is not data entry. It is a series of small judgements at speed.
A payment for 41,318.62 against four invoices, one of which was short paid for a reason that is on a stub somebody scanned, is a decision. Software that treats it as a match is guessing on your behalf.
Cash application
From a payment landing to a balance being right
Six stages. The interesting ones are the two where the platform declines to decide.
- Arrive
Remittance from wherever it comes
A shared mailbox through Microsoft Graph, an EDI 820 from a trading partner, a lockbox file, a portal upload or a scanned stub. Every door lands in the same rail and the same message is never ingested twice.
- Read
Structure without losing the original
Remittance detail is extracted under a strict schema and revalidated deterministically before it is trusted. The original stays exactly as it arrived, and the extraction is marked as a derivative of it.
- Propose
A match, with its uncertainty stated
Invoices identified, amounts allocated, remainder named. Where the platform is not sure, it says which part it is not sure about instead of choosing the most probable answer and moving on.
- Apply
A person accepts, adjusts or refuses
The posting carries their name. This is the step nobody else in this category wants to keep, and it is the one that means your ledger is never a place where machine guesses accumulate.
- Resolve
What did not match becomes work, not a suspense balance
Short pays become deductions against the collections case. Unidentified cash sits as unapplied, reduces availability rather than floating outside it, and appears on the worklist rather than in a quarterly clean up.
- Settle
Fees, reserves and the client's statement
Accrued fees are drawn, reserve movements are recorded with their own authority, and the client sees a statement that agrees with your ledger because it is generated from it.
Bank change content
One class of message is never applied, whatever it says.
The cash application mailbox is the softest target in a factoring company. It receives money information from strangers all day, it is worked at speed, and the people working it are rewarded for clearing it. A well written note from a debtor’s accounts payable department advising new remittance details fits into that flow perfectly, which is precisely why it works.
So that class of content is pulled out of the flow entirely. It is classified as requiring verification, it never reaches a party record as an edit, and the change it requests sits under a hold that only a named human can release. Automated approval is refused outright rather than disabled by default, because a setting that can be switched on is a setting that eventually gets switched on during a busy week.
The same message becomes evidence rather than an instruction. It stays attached to the party, dated, with its sender, and it is available in the fraud case if one is opened.
Classified, not processed
Mail content that looks like a bank account change is classified as requiring verification rather than applied.
It is the single most expensive email a factoring company receives, and the accounting inbox is exactly where it is addressed to arrive.
Ledger movement
The entries this business actually runs on
General ledger packages describe none of these, which is why factoring companies end up running two systems and reconciling them by hand.
Advance and reserve
A funding splits into what the client receives now and what is held back. Both sides are recorded against the schedule and the client, and the reserve balance is a position you can explain invoice by invoice.
Fee accrual
Discount and factoring fees accrue on the terms of the facility, on the days they are actually earned, rather than being computed once at settlement from a formula in someone's head.
Minimums and misc fees
Monthly minimums, wire fees, ACH fees, verification and audit charges, applied under the facility terms and visible to the client on the statement that shows them.
Reserve release
Moved when the conditions for moving it are met, recorded as a release with its own authority. Never as an adjustment that appears without an actor beside it.
Chargebacks and repurchases
An invoice that comes back does so as a recorded event against the schedule, the client and the obligor's history, not as a manual credit that severs the link to what caused it.
Unapplied and on account
Held visibly, reducing availability rather than sitting outside it, and appearing as work rather than as a balance that grows quietly between audits.
Audit packets
The examiner window
A field exam, a bank review or an annual audit asks the same underlying question in different words: show me what you did, when you did it, and what you knew at the time.
| Contents | Why it is in there |
|---|---|
| The figures, as of a fixed moment | A packet without an as of stamp is a report. With one, it is a record, and two packets from different dates can be compared honestly. |
| Evidence references into records | Every figure points at the invoices, cash, credits, reserves and documents that produced it. The packet is a route into the book rather than a summary of it. |
| The policy version in force | Eligibility rules, advance rates and reserve policy as they stood, so a later change cannot make a past decision look wrong or look right. |
| Actors and approvals | Who requested, who approved, who counter reviewed, and from which surface. Where an exception was granted, the reason they typed and when it expires. |
| What was not known | Checks that were unconfigured, sources awaiting a live feed, and coverage stated separately from confidence. An examiner trusts a system that reports its own blind spots far more than one that never has any. |
| A seal | The packet cannot be mutated. A database trigger refuses the write. A correction is a restatement that stands beside the original and names what changed. |
Risk observations are append only at the database level, and the platform refuses to show a delta it cannot prove. Where there is no comparable prior observation it offers to take a first observation rather than reconstructing a plausible yesterday. That refusal is what makes the rest of the packet worth reading.
Two systems, one book
Where FactorFox stops and your general ledger starts.
FactorFox holds the operating book: schedules, advances, reserves, fees, cash, deductions, chargebacks and client statements, at the level of the individual invoice and the individual obligor. That is the layer a general ledger package was never designed to hold, and the layer where every question a factoring company actually gets asked is answered.
Your general ledger keeps doing what it does. Client receivable ledgers synchronised from QuickBooks Online or Xero arrive read only, on the client’s consent, and FactorFox never writes into a client ledger. Synced invoices still face every ingestion gate, because a connector is a submission channel and not a side door onto your book.
The practical consequence is what happens at month end. The reconciliation most operations run in a spreadsheet exists because the operating detail and the accounting summary live in two places that were never reconciled continuously. Holding the detail with its evidence, and posting only what a person accepted, removes most of the differences before anyone has to find them.
Any remaining ones have names attached. A difference you can attribute is an afternoon. A difference you cannot is the week that everybody in this industry has had at least once.
Related
Bring us the payment nobody could apply.
The one with four invoices, two short pays and a stub in an email thread. We will show you the proposal FactorFox raises and exactly which parts it refuses to decide for you.