An over advance is money lent to a client beyond what their invoices support – a short-term top-up, repaid over time rather than recovered from a single invoice.
Before you start
Over Advances are optional per factor and must also be enabled on the client profile (Enable Over Advances). If the menu item is missing, one of those is off.
Creating an over advance
- In the left-hand menu, click Over Advances.
- Click Create Over Advance in the top-right corner.
- Choose the client, then enter the reference number and amount.
- Optionally, enter a Batch Recovery Rate (see Recovering it at funding below).
- Pick the Over Advance Type and complete its fields: Fee Amount for Flat fee, or the Payment Plan (interest rate, frequency and number of payments) for Amortization. A template fills these in for you.
- Click Create. The over advance appears on the Pending tab.
1 Over Advances · 2 Create Over Advance · 3 Manage Templates · 4 Status tabs · 5 Amount advanced and balance outstanding
1 Client · 2 Reference Number · 3 Over Advance Amount · 4 Batch Recovery Rate (optional) · 5 Over Advance Type · 6 Template (optional) · 7 Payment Plan (Amortization) or Fee Amount (Flat fee) · 8 Create
The list shows the Reference Number, Amount, Fee, Type and Funded Date, with totals at the bottom – the amount advanced and the balance still outstanding.
Repayment types
- Flat fee – the advance plus a one-off dollar fee. There is no schedule.
- Amortization – repaid on a schedule: a set amount recovered each period until the balance clears. The Interest Rate is the rate per payment, not an annual rate.
- Open Balance – a revolving balance that accrues interest, with no fixed schedule. This type is optional and turned off by default. Contact support to have it enabled for your environment.
Open Balance settings
When Open Balance is enabled, choosing it shows these settings:
- Rate type – Fixed, Prime +, SOFR + or LIBOR +.
- Annual rate, minimum rate and days per year (360 or 365).
- Interest method – simple or compound.
- Charge frequency – daily, weekly or monthly.
- Maximum balance – optional.
The settings can be edited while the over advance is Pending and are locked once it is approved. Interest is calculated each day on the end-of-day balance and charged at the frequency you chose. Missed days are caught up automatically, and a day is never charged twice. The detail page shows the balance owed, interest not yet charged and the payoff amount. Payments are applied to interest first, then to the principal.
Templates
Manage Templates holds reusable repayment structures, so a standard arrangement does not have to be rebuilt each time. Each template has a type, so you can save Flat fee, Amortization and, where enabled, Open Balance templates. Set the template up once and pick it when creating the advance.
Following it through
The tabs work like the rest of the app: Pending, Approved, Funded, Closed, All. To approve one, open the Pending tab, pick the client in the left-hand panel and tick the over advance. Then pay it out from the Funding screen. Over advances are included as rows in the batch's Download Disbursement CSV, like any other payment in the batch.
Recovering it at funding
When you next approve invoices for the client, the over advance appears as a chargeback line on the Approve for Funding screen. The amount there is what gets recovered from that funding.
- With a Batch Recovery Rate, the amount is filled in as the batch's total invoice amount × the rate, or the remaining balance if that is lower. For example, a 10% rate on a $5,000 batch fills in $500.
- Without a rate, the full remaining balance is filled in.
- Either way, the filled-in amount is only a suggestion. You can type a higher or lower amount, or remove the line, before you approve.
The rate can be changed at any time from the over advance's detail page. Whether over advances are attached to a funding automatically is set by Over Advance Auto Attach in Settings › System Config › Optional Features.
Applying and reversing payments
Payments can be applied against an over advance from the payment screen, alongside invoices. If you need to reverse one, use the dedicated Withdraw Over Advance Payment action. Withdraw / Return Payment on the Payments screen doesn't cover payments applied to an over advance (see Why a Payment Can't Be Withdrawn or Returned).
One thing to watch
Turning Over Advances on adds a ledger. If you push data to QuickBooks, that new ledger has to be mapped under Settings › Admin › Journal Setup before the next sync, or the whole push fails – not just the over advance entries. Map it as soon as the feature is enabled.