Advisors, lenders & money services
Books and taxes for invoice factoring companies.
An advance paid out against a client's invoice, a discount fee that is not earned until the invoice actually gets collected, a client's customer who never pays and triggers a recourse chargeback. Your own bookkeeper sorts it, an accountant checks every transaction, one number a month.
- From $197 a month
- An accountant on every transaction
- Cancel whenever
March cleared $18,200 in earned fees. A big invoice advance went out this month, but that is money the company is owed back, not an expense, so it never touched your profit number.
- Discount fee, collected invoiceDiscount fees earned
- Invoice advance, trucking clientFunds employed
- Recourse chargeback, unpaid invoiceRecourse losses
- Invoice verification softwareVerification software
- UCC lien filing, new clientFiling costs
Why your books are different
A factoring company's books go wrong in a few particular spots.
A generalist bookkeeper sees a big payment go out and calls it an expense. Your advance is money owed back to the company, not a cost, your fee is not earned until the invoice is actually collected, and a client's nonpaying customer can claw money back out of your pocket.
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1
The advance goes out but it is not an expense
When the company advances $40,000 against a client's invoice, that money is owed back once the end customer pays, and booking it as an expense makes a growing, healthy book of business look like the company is bleeding money every month.
What we doTracks advances as funds employed, an asset the company expects back, not an operating expense, so profit reflects only fees actually earned. -
2
The discount fee is not earned until the invoice is collected
A fee for factoring an invoice technically depends on the end customer actually paying, and counting the whole discount fee as income the day the advance goes out overstates earnings before the collection risk is actually resolved.
What we doRecognizes discount fee income once the underlying invoice is collected, so earnings reflect completed transactions, not advances still outstanding. -
3
A recourse chargeback looks like a random loss
When a client's customer never pays and the factoring agreement is recourse, the company can charge the unpaid amount back to the original client, and if that is not tied to the specific invoice, it just looks like money disappearing.
What we doTies every recourse chargeback back to the original invoice and client, so it reads as a collection issue, not an unexplained loss. -
4
Reserve holdbacks get mistaken for the company's own cash
A portion of every advance is usually held back as a reserve until the invoice is fully collected, and if that reserve is not tracked as money still owed to the client, it can look like extra profit that is not really the company's to keep.
What we doKeeps reserve holdbacks tracked as a liability owed to the client, not revenue, until they are released.
Your categories
The categories Gus keeps for an invoice factoring company.
Set up once for how the company deploys capital and earns fees. You never pick a category. He does, and an accountant checks it.
Money in
- Discount fees earnedFees kept once a factored invoice is actually collected.
- Same-day funding feesExtra fees for expedited advances outside the standard schedule.
- Reserve releasesPrior reserve holdbacks released back once an invoice fully collects.
- Referral incomeFees received for sending a client to another lender.
Money out
- Funds employedAdvances paid out against client invoices, tracked as money owed back, not an expense.
- Recourse lossesAmounts charged back to a client when their customer never pays.
- Verification softwareTools used to confirm invoices before advancing against them.
- Filing costsUCC filings to secure the company's interest in factored invoices.
- Credit insuranceCoverage against nonpayment risk on factored invoices.
- Collections costsCosts of pursuing invoices that go past due.
What we watch for you
- Funds employed
How much capital is currently out on advances against invoices not yet collected.
- Recourse loss rate
How much gets charged back for nonpaying customers, a sign of client and portfolio quality.
- Fee yield
Discount fees earned against the average funds employed over the month.
- The set-aside
What the company will owe on earned fees, kept separate from funds still on advance.
Ask Gus
Things factoring company owners ask Gus.
Text him like you would text anybody. He answers in plain English, and when a question is above his pay grade, an accountant looks and gets back to you.
No. That is money the company expects back once the invoices are collected, so it sits as funds employed, not as an expense against your profit.
Straight to a recourse losses line, tied to that invoice. It reads as a collection issue on that specific deal, not a mystery loss.
I count it when the invoice is actually collected, since that is when the risk is resolved. The accountant confirms that timing fits your method for the return.
The tax side
The tax side of a factoring company.
Most of what matters here is keeping advances off the profit and loss as what they are, capital deployed, not expense, and timing fee income to actual collection.
What your return has to get right
Your accountant signs it, so it gets done right the first time.
- Advances are not deductible expensesMoney advanced against an invoice is an asset the company expects to collect, not a business expense, and should never reduce taxable income the way an operating cost would.
- Discount fee income is generally recognized on collectionA factoring fee is typically counted as earned once the underlying invoice is collected, which the accountant confirms matches the company's method of accounting.
- Recourse losses may be deductible when the loss is realizedAn amount charged back to a client because a customer never paid can generally be deducted once the loss is confirmed, not merely anticipated. The accountant applies the right timing.
- Fee yield profit and the S corp questionOnce recourse losses are subtracted from discount fees earned, the remaining profit is taxed at 15.3 percent for self-employment tax up to the $184,500 wage base for 2026, worth weighing against an S corp election due March 15.
Deductions invoice factoring companies miss
Your bookkeeper knows what to look for in your statements. You never have to.
- Invoice verification software
- UCC filing fees
- Credit insurance premiums
- Collections agency fees
- Errors and omissions insurance
- State licensing where required
- Continuing education courses
- Office rent
- Phone and data plans
- Marketing and referral fees paid
- Background checks on new clients
- Laptop and office equipment
General information about 2026 federal rules, not advice for your business. Your accountant looks at your actual numbers before anything gets filed.
All year, not just April
A factoring company's year, kept every month.
Advances go out and invoices collect on their own schedule all year, with funds employed rising and falling constantly. Your team keeps the company's own books current through all of it. Every month in between, your bookkeeper closes the books and speaks up the moment something looks off.
- January
Year planned
New client volume often rises as businesses restart after the holidays, 1099s go out for anyone paid outside payroll, and last year's return gets started.
- April
Filed. Done.
Your return is filed and signed, counting only fees actually collected all year, so the number due is not inflated by outstanding advances.
- July
Halfway check
Where the company stands, what it will owe, and whether the recourse loss rate is holding steady.
- October
Before year end
A look at client concentration and credit insurance coverage, and software worth buying before December.
What you get
What you pay depends on what your business needs, and it does not move after that, busy season or slow. No hourly bills, no surprise invoices, no setup fee.
Book a call- Monthly bookkeeping
Every transaction sorted into categories set up for invoice factoring companies. You never categorize a thing.
- An accountant checks every transaction
Real review, every month, before your books close. Not a spot check.
- Your business tax return, filed
Prepared, reviewed, and signed by that same accountant every year.
- The monthly number
What you made, what you spent, what to set aside for taxes.
- Your own bookkeeper
A real person assigned to your business, in the app whenever you need them. No hold music.
- On your books all year
Every month, not just in April. Your team speaks up whenever something is worth your attention.
- Cancel any time
No contract. No cancellation call. Your books are yours.
Straight answers
Questions factoring company owners ask first.
I advance money against client invoices every week. Does that count as an expense on my books?
No. Advances are tracked as funds employed, money the company expects back, not as an expense. Only the discount fee actually earned shows up as income.
When exactly is my discount fee counted as earned?
Once the underlying invoice is actually collected. Counting it earlier would overstate income before the collection risk is resolved.
A client's customer never paid and I charged it back under recourse. How does that get tracked?
It ties back to that specific invoice as a recourse loss, so you can see it clearly and track how often it happens across your book of business.
Does Gus decide which invoices to advance against or set my discount rates?
No. Gus and your bookkeeper only keep the company's own books, what it makes and spends. Underwriting and pricing decisions stay entirely with you.
I hold back a reserve on every advance until the invoice collects. Is that my money in the meantime?
No. It is tracked as money still owed to the client until it is released, not as company revenue, even while it sits in your account.
My books have never separated advances from actual earned fees. Can Gus fix that?
Yes. Send the bank statements you have and Gus separates funds employed from earned fees, so your real profit finally shows up clearly.
Is a real accountant checking my books?
Yes. You get your own bookkeeper, Gus does the first pass on every transaction, and an accountant checks every one before your month closes. That same accountant prepares, signs, and files your business return. Goatkeeper is not a CPA firm, and we never pretend a person looked when they did not.
What does it cost, and can I cancel?
It starts at $197 a month, depending on what your business needs. No setup fee, no hourly bills, no contract. Cancel any time from the app, and your books go with you.
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What makes a bookkeeper worth paying for Every business we keep books for
Book a call
Pick a time. That's the whole signup.
Fifteen minutes with a real person on our team. They look at where your books are, tell you straight what it takes to get caught up, and get you set up on the spot if it fits.
- $197 a month to start
- An accountant on every transaction
- Cancel whenever