When using invoice factoring for growing a business, the contract work being performed must be totally completed and accepted by your customer. Submitting an invoice to be factored by the factoring company prior to the work being done is called pre-billing. One example to illustrate this is; advertising campaign transactions. A magazine publisher has collected a group of customers who plan to advertise in an upcoming issue. This means the ads have not run and the customer has not received the full service which gives them grounds to not pay the invoice. Permanent recruiter transactions are the same.
The crux of pre-billing, and why factoring companies are reluctant to fund those invoices is, the chance for a customer to not pay the invoice. A factoring company has to know that their collection rights are solid in order to mitigate the risk involved in making an advance on invoices. Should a dispute occur, evidence the service or product has been delivered is critical.