It seems like a simple question, but when it comes to invoice factoring, it really has a pretty specific definition. When a company provides a service or sells goods to a customer, they can make the sale based on terms. When terms are offered to a customers, the company then gives them an invoice, which is basically a bill. An invoice acts like a loan from the company to their customer, as the company is now waiting for payment to be made.

However, an invoice isn’t an obligation to pay until the customer accepts the work. Having the customer recognize, understand, and agree to the invoice is very important when it comes to insuring timely and correct payment. Sometimes customers will blame paperwork and miscommunication to put off making their payments. Having an effective and easily understood system in place with help tremendously.

From a factoring company’s point of view, knowing that everything is completed is important. Partial shipments, pre-billing, and unfixed warranty problems are all examples of invoices that haven’t been totally accepted by a customer.

The bottom line is that a factor will need to call upon the customer to make a payment without any possibility that the payment won’t be collectible.

If you’re company collects payments from customers through invoices, consider applying for our factoring services.

Post written by Senior Copywriter “Nikki Wakefield” of CoreFund Capital, LLC.