Updated 2026-05-19

Account purchase

The transaction in which the factor buys a specific invoice or account.

Why it matters

Each account purchase creates an advance obligation, a reserve hold, and a repurchase risk that must be tracked separately. The cumulative advance balance across all account purchases in a program determines current facility utilization. Account purchases are the transaction-level record of the factoring program: each purchase documents the invoice amount, advance percentage, fees, and reserve. The purchase terms may vary by invoice if the program uses dynamic pricing, or may be uniform across all invoices under a standard pricing schedule.

How it appears in contracts

Account purchase documentation is reflected in the funding confirmation or purchase receipt provided by the factor for each funded invoice. The master factoring agreement defines the terms that apply to all account purchases; the individual purchase confirmation records the specific details. In the event of a dispute about a specific invoice, the purchase confirmation and the master agreement together define the seller and factor rights. Sellers should retain all purchase confirmations as part of their accounts receivable records to reconcile with reserve release statements and to document the basis for any disputed chargeback.

Related terms

• Advance rate
• Reserve
• Recourse
• Chargeback