Invoice
A bill sent to a customer describing what was delivered and what is owed.
Why it matters
An invoice must be valid, undisputed, and accepted by the customer before it qualifies for factoring. An invoice that represents a service not yet delivered, a disputed quantity, or a pricing disagreement with the customer is not a clean receivable and may be declined or charged back. The factor treats each submitted invoice as the seller representation that the underlying obligation exists and is collectible. Submitting invoices for work in progress, conditional deliverables, or disputed amounts can result in misrepresentation claims under the factoring agreement.
How it appears in contracts
The definition of an eligible invoice appears in the Eligible Receivables section of the factoring agreement and is typically one of the most detailed definitional clauses. An invoice must: reflect an actual completed sale or service, name a creditworthy account debtor, not be subject to any right of offset or dispute, not be more than a defined number of days old, and fall within the approved credit limit for that customer. Sellers who submit invoices that do not meet these criteria expose themselves to chargeback under recourse provisions and potential misrepresentation claims under the warranty of validity.
Related terms
Related reading
Sources
- International Factoring Association - International Factoring Association. Accessed 2026-05-19.
- Secured Finance Network - Secured Finance Network. Accessed 2026-05-19.