A factoring company relies largely on the verification process for establishing that invoices are genuine. Because of the nature of the funding – off a piece of paper, corroboration is required. Generally in reoccurring billing situations this entails contacting the accounts payable department of your customer to verify; the amount of the invoice, the work has been completed and accepted, and that the remit to address properly shows our payment lockbox address. Usually this can be done over the phone, by fax, or email.
Sometimes there are situations where more formal verification is required by the customer. In situations where you only have one customer, or the billing model is somehow abnormal – then the factor will need the customer to sign a document stating that this invoice is proper and will be paid in full without any credits deducted, or contesting of the obligation. In factoring this is called a hard sign off.
So be prepared to the possibility of having your customer verify in writing that the proceeds of your invoice have been pledged to a third party (the factoring company). This is a normal course of business and is frequently used when financing invoicing. But also be pro-active in explaining the customer that this necessary procedure is the result of you gaining better financial footing.