Running an invoice financing facility well takes a checklist for every stage

Running an invoice facility is a routine, and that routine decides whether it costs what you budgeted or a good deal more.

So this checklist is not a list of documents to gather. That work is covered in invoice financing and elsewhere. This is the operating discipline: what to do before the first invoice goes in, on every invoice, every week, every month, every quarter, and at the exit.

What to take away

The facility charges by time, so the routine is about shortening time at every step.
Before the first submission, finish eligibility, customer approval, onboarding, and ledger mapping.
On every invoice, check debtor, amount, due date, notice, and submission.
Reconcile weekly. A reserve you cannot explain is money you cannot plan around.
Start the exit checklist the day you sign, because the notice period will be longer than you remember.

Before the first submission

Before First Submission

Name one owner for the facility
Set up and test collection account
Notify customers and confirm payment details
Build evidence chain template
Record facility mechanics and fees
Calendar review, minimum term, exit notice

Running an invoice financing facility well takes a checklist for every stage. The first stage is setup.

Eligibilityread the agreement's definition of an eligible receivable. Common exclusions are related-party invoices, invoices already assigned, and invoices past a set age.
Customer approvalget the debtor approved before you raise an invoice. Approval can take a few business days.
Onboarding documentsprovide the signed agreement, a board resolution if required, proof of insurance, and an authorized contact list.
Ledger mappingset up a dedicated account for advances, fees, and reserves. Map each customer's payments to the invoice the financier sees.

Reserve release typically runs 30 to 60 days after the customer pays.

Every invoice

Every Invoice Checklist

Raise invoice on delivery and acceptance
Attach evidence chain before submitting
Check eligibilityage, concentration, disputes
Submit same day if whole-turnover
Record submission date, advance, reserve

Run this check on every invoice before you submit it. The fee clock starts when the financier advances.

Verify the debtor. Confirm the customer is on the approved list.
Verify the amount. Match the invoice total to the purchase order or contract.
Verify the due date. The due date must fall inside the agreement's range, often 30 to 90 days.
Send the assignment notice. If the agreement requires it, send it the day you submit. Keep proof.
Submit the invoice the day you raise it. A month-end batch adds days of cost.

Every week

Weekly Reconciliation Tasks

Reconcile customer payments to ledger
Chase invoices before due date
Log disputes, short payments, credit notes
Check reserve release and ask why

Reconcile customer payments received by the financier against your ledger. Match every receipt to an invoice.
Chase anything approaching its due date, before it is due. The fee clock does not stop for a customer who is merely slow.
Log any dispute, short payment or credit note the day you learn of it, and tell the financier if the agreement requires it. Silence on a dispute is the kind of thing that converts a validity guarantee into a personal liability.
Check the reserve release. Reserves should come back as invoices settle. If they do not, ask why that week, not at month end.

Every month

Monthly Facility Review

Reconcile financier statement line by line
Compute cost as share of cash advanced
Review days outstanding by customer
Check concentration and minimum charge

Reconcile the financier's statement to your ledger line by line: advances, fees, reserve movements, releases.
Compute what the facility actually cost this month, as a share of the cash it advanced. Compare it with the figure you budgeted on. If the gap is widening, find the invoice or customer causing it. The cost per dollar received, which is the figure that makes this comparable with any other product, is defined in the term loans calculator.
Review days outstanding by customer. One customer drifting from prompt to slow raises your cost on every invoice you send them.
Check concentration. A good month with one customer can push their share over the limit and make their next invoices ineligible.
Check the minimum charge. If volume fell short, know it now rather than on the invoice.

Every quarter

Quarterly Agreement Review

Reread default and termination provisions
Review if facility still fits
Confirm insurance requirements
Update customer list with financier

Reread the agreement's default and termination provisions against the quarter you actually had. Late reporting, a missed covenant or a customer moved to a different bank account can each be an event the financier is entitled to act on.
Review whether the facility still fits. If the underlying problem was collection discipline rather than customer terms, the weekly chasing above may have shrunk the gap enough that a cheaper instrument, such as a line of credit, now fits.
Confirm insurance, if the agreement requires credit insurance or names the financier on any policy.
Update the customer list the financier holdsnew customers approved before invoicing them, departed ones removed.

At the exit

Give notice in the form and within the window the agreement specifies, and keep proof it was received.
Agree the run-offwhich invoices remain financed, how the reserve is released, what termination charges apply.
Redirect customer payments back to your own account, and confirm with each customer that the change has been made.
Obtain written confirmation that the filing against your receivables has been terminated, and check by searching. The uniform text imposes a duty to file a termination statement once there is no obligation left, on conditions your state's enacted version sets, so this is a request the financier expects rather than a favor you are asking.
Obtain the release of any guarantee, in writing.
Reconcile the final statement to zero, including the last reserve release.

Where to check anything specific

The agreement governs all of the above, and each financier's process differs. The provisions that decide what happens in a bad quarter are described in application and repayment. For neutral background on the product, the SBA business guide is a reasonable place to start.

Common questions

Why weekly rather than monthly reconciliation?

Because the cost accrues daily. A misapplied payment found at month end has been charging you for weeks.

What is the single most expensive habit?

Raising invoices in a month-end batch. Every day between delivery and invoice is a day of cost you chose to add.

Do I have to tell the financier about a dispute?

Read your agreement, and in most cases assume yes. A dispute you sat on is a dispute that can be read as a misrepresentation when it surfaces.

How early should the exit be planned?

From signing. Notice periods and minimum terms are long enough that a facility you decide to leave in the spring may still be charging you in the autumn.