We recommend consulting with your financial and tax advisor(s) for financial practice and accounting specifics that are suitable to your business and the time-frame of the underlying advance(s) with Capchase.
With that being said, companies typically account for Capchase advance in the following manner:
Balance Sheet
The total upfront underlying contract value against which Capchase has advanced can be treated as a liability on the balance sheet (payables/deferred revenue, etc.). Note this will not include the platform fee which is incurred as the service of platform availability is delivered.
P&L
- The platform fee paid to Capchase can be recognized equally over the 90 day period following the associated draw as an expense on the P&L.
- The remaining implied discount related to the Grow Financing amount could be amortized over the contracted term, coinciding with the monthly recognition of the discount as an expense on the P&L (Other expenses, Operating Expenses, Financing Fee, etc.).
Cash Flow Statement
The platform fee, advance and repayments along with amortized discount fee are reflected in net income and changes in the liability.
If you have any questions or regards, please reach out to your Growth Advisor or send us a message at support@capchase.com.