A current aged-debt report
Customer names, invoice dates, due dates, balances and disputed items clearly identified.
Lending judgement
Prepare for an invoice finance application.
One maintained checklist for every invoice finance discussion: the documents that evidence your ledger, the questions that surface the all-in cost, and the controls that keep a live facility healthy.
Step 1 · Documents
Documents and controls to prepare.
Before approaching a provider, assemble information that shows both the value of the receivables and the way the business controls them. A complete pack makes the discussion more useful and reduces the risk of comparing indicative terms that later change when the ledger is examined in detail.
Representative contracts and invoices
Together with purchase orders, signed timesheets, delivery notes or other evidence that the goods or services were accepted.
Management accounts and a 13-week forecast
Showing why funding is required, the expected level of use and the route to lower reliance if trading weakens.
Credit notes, bad debts and concentration
A schedule of each, plus an honest explanation of any unusual balances. Hiding exceptions only moves the problem into due diligence.
Step 2 · Questions
Questions to ask before signing.
Model the downside, not just the headline. Ask for an all-in illustration at your expected utilisation — including service fees, discount charges, minimums, reserves and exit terms — then test a lower-sales case and a concentration case rather than relying on a headline rate.
Eligibility and the available advance
Which invoices would be eligible, and what would reduce the available advance for your specific ledger and customers?
The all-in cost at real utilisation
What does the facility cost at expected utilisation, including service fees, minimums, reserves, audit costs and exit terms?
Ownership of the day-to-day
Who owns customer communication, reporting, reconciliations and dispute escalation once the facility is live?
Behaviour in a downside case
How does the facility behave if sales fall, a large debtor pays late, or invoice quality dips for a quarter?
Step 3 · Controls
What to monitor after the facility starts.
A facility is healthy when the numbers behind it are. These are the controls we would expect any well-run borrower to keep.
Availability and headroom, weekly
Review availability and headroom every week, not only the bank balance. Track eligible debt, overdue invoices, disputes, dilution, concentration, average utilisation and the effective cost of funds.
Compare against the commercials
Set those measures against gross margin and debtor days. Earlier cash should not be allowed to mask a deteriorating debtor book.
Act on the cause, not the limit
If the facility is being drawn more heavily while invoice quality or profitability deteriorates, stop treating the issue as a request for a higher limit and address the commercial cause.