In order to use accounts receivable financing for growing a business, the work being performed must be completed and accepted. Submitting an invoice to be funded prior to the work being done is called pre-billing. A good example of this are advertising 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.
The crux of pre-billing and why factoring companies are reluctant to fund those invoices is the ability for the customer to not pay the invoice and win in court on a collection action. Without proof that the service has been fully rendered, the court will be reluctant to side with the collector. 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.