When factoring receivables it is important that invoice payments be made directly to the factor. Once the product or service has been delivered, the invoice is created for payment and submitted to the creditworthy customer. When the customer pays the bill, the payment MUST go straight to the factor, always. Upon signing up with a factoring company a Purchase and Sale Agreement is the contract between the client and the factor. The agreement allows the factor to deposit checks coming from the client’s customers. This has the benefit of having the customer making checks out in the clients’ name but remitting to the factors banking address. It is not necessary to change anything but the
This makes invoice factoring easy to use for all involved.