I need to find out how to do a journal entry for a factoring company’s loan……
This depends on whether we talking about factoring with recourse or without recourse. If you are meaning without recourse, please see our article here in our accounting tutorial series for a full explanation.
However if we are dealing with a “recourse” situation then that is slightly different. In this case the journal entry would be:
Dr Bank (funds received)
Dr Finance Expense
Cr Refund Liability
The credit is applied to a refund liability because even though the receivables have been sold there is a direct recourse back to the seller. Therefore there is still a liability in place due to the IFRS 9 “Financial Statements” de-recognition criteria not being met – unlike the non-recourse situation where that liability is not in place.