Most factoring companies verify your invoices before depositing the advance into your bank account. Factors verify invoices to ensure they are accurate and don’t have any problems. This article explains the processes that factoring companies use to verify invoices. It covers:
- Why are invoices verified?
- Verification methods
- Customer impact
- What happens if there is a problem?
- One important piece of advice
1. Why are invoices verified?
Invoice verifications are typical in the factoring industry. The verification process helps prevent the accidental over-financing of invoices. It also prevents the factor from financing invoices that are being disputed. Factoring companies verify that the:
- Product/service was delivered
- Product/service met your client’s expectations
- Invoice amount is accurate
- Due date is correct
2. Verification methods
Verifications are done with your customer’s Accounts Payable department. Factoring companies use one of the following three methods:
a) Online customer portal
Most large companies have an online portal that allows vendors to review their invoices. Factoring companies prefer to verify invoices through the vendor portal if your customer offers it. This method is the fastest, most effective, and most convenient way to verify invoices.
b) Email
Invoices can also be verified via email. In this case, the account manager at the factor sends an email to your customer’s accounts payable department asking for confirmation of the invoice.
c) Phone call
Invoices can also be verified by phone if needed. Phone verifications can be effective if you need to expedite the process or if the invoices are complex.
3. Customer impact of verifications
Clients are sometimes concerned that their customers may disagree with the verification process. This scenario can happen, but it’s not typical. The staff at factoring companies always try to have a soft touch to minimize the company’s involvement in the transaction.
We recommend that you advise customers that invoices will be verified regularly as part of your quality assurance process. Be sure to emphasize that one of the objectives of this practice is to ensure that they are satisfied with your company. Framing it in positive terms helps obtain their collaboration. Your factoring company should be able to give you more information on how to best approach your clients.
4. Disputes and problems
Every so often, the verification process uncovers a problem. Problems often occur if your client is not satisfied with the services or if there is a misunderstanding regarding expectations. Most factors inform you of issues immediately so that you can engage your customer and resolve the problem. Invoices subject to disputes can’t be financed until the problem is resolved.
5. One last word of advice
The verification process is one of the most important contact points between your clients and the factoring company. You should become familiar and comfortable with your provider’s verification processes before you sign on as a client. You should also consider that some clients may not agree or collaborate with the verification process. If that is the case, you may be better off not financing invoices for that particular client.
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