How do you approve my invoices for payment?
The invoice approval process boils down to three steps. First, we verify that the invoice you have presented for payment as well as any supporting documentation is complete and accurate. Next, we bill your customer through whatever process they normally require. This process varies from customer to customer. Lastly, our team verifies with your customer that the amounts you have invoiced are correct, and all required documentation is present and accurate. In the case of a first-time funding of a customer, a factoring company has the additional step of sending a client’s customer a Notice of Assignment and verifying that it has been accepted.
Factors need verification of the accuracy of the invoice amounts and that the customer intends to pay the invoiced amount. Since a factoring company uses those customer approvals to verify what amounts they can advance on an invoice, the approval is critical to the efficient functioning of a same-day payments service. Since the invoice approval is a formal verification of the accuracy of the information provided and a promise to pay the amounts listed, it is critical that a factor does not fund an invoice until this approval is received. Any underpays, adjustments, or other payment irregularities need to be known about prior to funding.
Once the invoice has been billed by the factoring company, the approval process is highly dependent on the response time from the customer. Since internal approval processes vary highly from company to company, giving a firm time frame is impossible. However, in the vast majority of cases, the process is complete in less than 48 hours. In the case of trucking, the signed bill of lading is considered the approval of the invoice, and therefore we are able to fund our trucking clients immediately when we bill.
Unfortunately, if a factor is unable to get an invoice approved by the debtor on the invoice, they will be unable to approve it for same-day payment. Since the invoice approval is intended to verify the amounts being billed, without it a factor would have no idea whether the work or amounts were valid, and would therefore be unable to fund it. However, your factoring company would still be able to bill your customer and you would be paid in your normal invoice term.