Replacement invoice

A new eligible invoice provided to substitute for a charged-back one.

Why it matters

A replacement invoice must meet all eligibility criteria at the time it is submitted as a substitute for a charged-back invoice. If the replacement is from the same customer who disputed or failed to pay the original, the factor may decline it as coming from a debtor with a deteriorating payment profile. Replacement invoices from new eligible customers that meet the credit requirements are more likely to be accepted. The option to replace rather than repurchase in cash is valuable, but it requires the seller to have sufficient eligible receivables on hand at the time of the chargeback.

How it appears in contracts

Replacement invoice provisions appear in the Chargeback or Recourse section of the factoring agreement. Common language permits the seller to substitute an eligible receivable of equal or greater face value in place of a charged-back invoice within a defined period after the chargeback notice. The replacement must meet all current eligibility criteria, including account debtor credit availability. If the seller submits a replacement that is later also charged back, the agreement typically limits the number of replacement cycles before a cash repurchase demand is made.

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.