What your funder needs from your collections team
If your business factors its receivables, your collections team is doing two jobs at once. Here is what your funder relies on you for, and why it decides how much cash your facility makes available.
On Business Training · August 11, 2026 · 6 min read
This article is for collections staff at businesses that factor their receivables or borrow against them, and especially for those on non-notification facilities, where customers may not know a funder is involved and your team still does all the collecting.
On a facility like that, your receivables are the collateral for the money your business borrows. Every invoice you bill, collect and apply changes how much the business can draw. That makes your collections work more important, not less, and it means your funder relies on you for a few specific things.
1. Payments in the right account
Your agreement says where customers must pay, usually a lockbox or a controlled account your funder sweeps. Payments that land anywhere else, in your operating account, by card, or by check mailed to your office, must be turned over to the funder right away and reported.
Most problems here are innocent: a customer with old remit-to details, a new customer who was never told. But a funder can’t tell an innocent mistake from a deliberate one unless you report it. Check the remit-to details on every new customer’s vendor setup, and correct old ones as you find them.
2. Cash applied quickly and correctly
When money arrives, your funder needs to know which invoices it paid. Unapplied cash makes the aging look older than it is, which can reduce availability, and it hides disputes and short pays that need attention. Apply from the remittance, not by guessing, and follow up with customers who pay without one.
3. Disputes and credit memos, reported promptly
When a customer disputes an invoice, your funder needs to know, because a disputed invoice may be ineligible. When you issue a credit memo, it has to go through your system and your funder’s records right away.
Holding credit memos back, even with good intentions, is one of the things funders watch most closely. It overstates the receivables, and a funder who finds credit memos being held will treat it as a serious default. Report disputes and credits as they happen.
4. Invoices that are real, complete and on time
Only bill once the goods have shipped or the work is done. Billing early, even by a few days to help cash flow, is pre-billing, and funders take it seriously. Keep the proof: signed bills of lading or delivery receipts, customer-approved timesheets, completed work orders. Your funder will ask to see them.
5. Honest, regular reporting
Your facility will ask for regular reports: usually the A/R aging, a schedule of new invoices, and a reconciliation between your records and the funder’s. Send them on time and make sure they agree with each other. If something doesn’t reconcile, say so and explain why, rather than leaving the funder to find it.
6. Help with verifications and field exams
Your funder will contact some of your customers to verify invoices, and will send examiners to review your books and records from time to time. On a non-notification facility, verifications are usually done discreetly.
Help them go smoothly: give accurate customer contacts, have the paperwork ready, and answer questions quickly. Delays and reluctance at verification time are among the first things a funder notices.
Your A/R aging is your funder’s collateral. Keep it accurate and the facility works for you.
Keep your own notes
A short, dated note of every call, dispute and promise is the best protection your team has. It lets anyone pick up an account, shows your funder that an old invoice is being worked rather than forgotten, and answers most field exam questions before they’re asked. If a customer later disputes an invoice, your notes are the record of what was agreed and when.
Why it pays you back
Good collections on financed receivables isn’t only about keeping the funder happy. It directly affects your business’s cash:
- Younger receivables mean more availability. Invoices past a set age are usually ineligible.
- Fewer disputes mean fewer surprises. Disputed invoices are often excluded until resolved.
- Clean reporting builds trust. Funders are more flexible with clients whose reporting they can rely on, on concentration limits or a temporary overadvance.
When a customer can’t pay
Sooner or later a customer will struggle. Tell your funder early. Most funders can help, and they need to know before the receivable becomes uncollectible. Never quietly stop collecting an old invoice or write it off without telling your funder.
Credit and Collections for Clients is a short library written for exactly this job, at the businesses a lender funds. It covers How Your Funding Works and Why Collections Matter, Your Facility’s Rules for Collections, Reporting to Your Funder and Working with Your Funder’s Verifications and Field Exams, and shares its collection call courses with Effective Credit and Collections.