Glossary · operations

Invoice

Also called bill, receivable, account.

A demand for payment for goods delivered or services performed, and — once the work is genuinely complete — an asset that can be sold or borrowed against.

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What it means

An invoice becomes financeable when the obligation behind it is earned, undisputed and owed by a creditworthy party. Until then it is a piece of paper. Factors and asset-based lenders are not buying the document; they are buying the account debtor's obligation to pay, and everything they do is directed at confirming that obligation exists and is clean.

What makes an invoice fundable

  • The goods shipped or the service was performed and accepted, evidenced by a signed delivery ticket, proof of delivery, timesheet or completion certificate
  • It references a purchase order or contract the customer acknowledges
  • Terms are stated and consistent with what the customer actually pays
  • The customer is a business or government body, not a consumer
  • There is no offset, warranty claim, retainage or dispute attached
  • It has not already been sold or pledged to somebody else

Assignment

When an invoice is factored, the seller assigns the right to payment. The account debtor is given a notice of assignment directing them to pay the factor, and after that notice, payment to the seller does not discharge the debt — the customer can be made to pay twice. That is why factors chase misdirected payments so aggressively.

Some contracts contain anti-assignment clauses. Article 9 makes many of them ineffective as between the parties for the assignment of accounts, but the position for government contracts and certain other arrangements is different and requires the statutory procedure.

Where this one catches people

Pre-billing is the most common form of factoring fraud, and it usually starts without any intention to defraud. A contractor invoices a job at 90% complete because cash is tight, sells the invoice, and finishes the work the following week. The receivable did not exist when it was sold. That is a breach of the warranty in every factoring agreement, it triggers the validity guaranty, and depending on the facts and the jurisdiction it can be treated as fraud rather than a commercial dispute.

Where you will meet this term

Invoice Financing Asset-Based Lending

Read next

GuarantorThe individual or entity who agrees to answer for a business's obligation if the business does not, putting p… Ineligible receivablesInvoices a factor or asset-based lender excludes from the borrowing base entirely, so they generate no availa… Invoice discountingBorrowing against the receivables ledger while continuing to invoice and collect in your own name, so custome… Invoice factoringSelling receivables to a third party at a discount for immediate cash, with the buyer taking over collection … Invoice verificationThe factor's process of confirming with your customer that the work was delivered, the amount is right and no… Notice of assignment (NOA)The written notice telling a customer that its invoices have been assigned to a factor and that payment must …

Invoice — common questions

What does invoice mean?

A demand for payment for goods delivered or services performed, and — once the work is genuinely complete — an asset that can be sold or borrowed against.

Where does invoice catch people out?

Pre-billing is the most common form of factoring fraud, and it usually starts without any intention to defraud. A contractor invoices a job at 90% complete because cash is tight, sells the invoice, and finishes the work the following week. The receivable did not exist when it was sold. That is a breach of the warranty in every factoring agreement, it triggers the validity guaranty, and depending on the facts and the jurisdiction it can be treated as fraud rather than a commercial dispute.

Is invoice the same as an interest rate?

Invoice is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does invoice apply to?

Invoice Financing, Asset-Based Lending.

Is there a worked example of invoice?

Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.

What else should I read alongside invoice?

Guarantor, Ineligible receivables, Invoice discounting, Invoice factoring, Invoice verification.

Has this definition been checked?

Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.