Consignment Sales Won’t Qualify

When a company selling a product uses invoice factoring to increase its production – the successful financing relies on a final sale. If accounts receivable financing is in place, then the customer must acknowledge they have purchased all the product as delivered. Selling product as a consignment, meaning the customer can return any product that does not sell, is a problem for a factoring company. The factoring company will make an advance on the face value of an invoice. Should the customer subsequently credit a portion of that invoice for unsold product returned, the factor will not be repaid. Full repayment is the goal of the factoring company, so every invoice must have a clear verification that the entire sale resulting in an invoice is final, unconditionally.