On occasions where the work being completed or sale being finalized is in question – a sign off may be required. When a factoring company is somewhat unsure if the account debtor (customer) is acknowledging that the invoice is owed and due, a document is prepared for this type of situation.
An “estoppel letter” is sent to the customer who must sign off that the amount of the invoice is correct and there are no offsets or credits that will be applied to the payment. This short agreement insures the payment will be made in full at the agreed upon time.
Typically it is rare that these forms are used on a regular basis, as most work contracts spell out what is expected and what is owed. But in cases where the business model is ambiguous, or unclear, it’s in the best interest of all concerned parties that the terms be set out in writing so there is no confusion.