Factoring companies rely on performance in a big way when it comes to invoice factoring. The factor needs to know that whatever service their client provides or product it sells, the customer is 100% satisfied with the outcome. Prior to getting an advance against an invoice, factoring companies will verify directly with the customer that the work has been completed. Billing before work is done is called pre-billing, and billing incrementally is called progress billing. For the most part factoring companies cannot make advances until final billing. It is preferable to have a history of performance when seeking commercial financing. This enables factoring companies the ability to judge the riskiness of the transaction based on previous experience.
The other aspect regarding the importance of performance is related to the warranty directly tied to the sale. If the work was not done correctly, the performance is called into question and credits may be taken against a due and owing invoice. So not only do factoring companies require the work to be completed, they also seek to verify the satisfaction of the customer. Continuous problems related to performance will undoubtedly result in discontinued funding. More than enjoying a good show, excellent performance matters in the success of a growing company.