An invoice to be factored is only ready for financing once the work, whether a service or product sale, has been completed and accepted. A factoring company cannot provide a capital advance on a “pre-billed” account. This means whatever the job entails, the work must be done.
In order to fund an invoice the factoring company must verify with the customer that the work has been completed and accepted. Also the factor wants to be assured that the customer will not be taking any credits off the payment due to old outstanding issues or the work was not completed up to specifications.
Usually the factoring company will verify an invoice by calling the Accounts Payable department of the customer company just to make sure the new invoice submitted is in the system and is planning to get paid under the terms – usually 30 days. Because we may be doing hundreds of these verifications, the process is built to be expedient without much interference with the daily operations at the customer level.