Approved invoice

An invoice the factor has reviewed and agreed to fund.

Why it matters

Only invoices that meet all eligibility criteria and pass verification are funded. An invoice must be valid, undisputed, delivered, accepted by the customer, and within the approved credit limit for that account debtor. Invoices that fail any eligibility check are returned or held without funding. Understanding which invoices qualify in advance helps sellers plan cash flow and avoid submission of invoices that will be rejected. Factors may approve a program but decline individual invoices that do not meet the criteria defined in the agreement.

How it appears in contracts

Factoring agreements define approved invoices in the Eligible Receivables section. Common criteria include: invoice must be from an approved account debtor, must not be more than a defined number of days old at submission, must not be subject to a dispute or offset, must not contain anti-assignment language, and must not be a government invoice unless the program specifically allows it. Submitting invoices that do not meet these criteria as if they were eligible may constitute a misrepresentation under the agreement representations and warranties.

Related terms

Related article: What is invoice factoring?

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.