Factoring invoice verification
The distinction between confidential invoice discounting and factoring is that in factoring, invoices must be disclosed. When entering into a factoring arrangement you relinquish your credit control to the provider’s sales ledger service which carries out the invoice collection procedure. With invoice discounting agreements you generally retain control of your credit management.
What is invoice verification?
When one purchases goods such as groceries or a car the buyer can check the condition and quality of the good before they acquiesce it. They are tangible goods, whereas invoices are intangible. Invoices are financial obligations that you can not just examine by looking at the invoice.
Thus, factoring companies are left with a problem because just like any buyer, they want to make sure they are investing in quality invoices. The only way they can do this is through the invoice verification process.
How does invoice verification work?
When verifying an invoice, most invoice factoring companies are concerned about three things:
- Is the invoice amount correct?
- Was it paid on time?
- Is the invoice acceptable?
Most factoring companies verify invoices by sending an e-mail to the accounts payable representative of the customer. Some factoring companies prefer to handle verifications by telephone, mostly because it’s less impersonal than e-mail. Some verifications can also require a customer signature too.
Why can invoice verification be a problem?
Factoring clients are usually concerned about invoice verifications because of the potential negative effects it could have on the customer relationship. While most factoring companies handle these issues professionally, there is always the possibility that a customer relationship could be affected.
Ask a factoring company about their invoice verification procedures before you sign on as a client.
The MarketInvoice option
As mentioned already regarding credit control there is a stringent checking procedure that MarketInvoice carries out prior to any company trading on the platform.
By accepting invoices from blue-chip debtors risks that an invoice will not be paid are reduced, although the invoice and the debtor are thoroughly screened before the invoice can be auctioned. Blue-chip debtors are large corporate clients that are very strong financially, with a solid track record of producing earnings and only a moderate amount of debt.
A factor can damage your relationships with your customers. When pursuing unpaid invoices they might be much more forceful than you would be. MarketInvoice offers a service that is:
- Confidential; your clients will not know that you are using our financial services
- You retain the communication with your customer, and it is your responsibility to chase up the invoice. You maintain credit management
- We only contact your client to make sure that they have the invoice number on their books
- Your customer will pay the invoice to an account in your name held with MarketInvoice, but our name will not appear on the account