1. Business Operations: The business continues to operate as usual, providing goods or services to its customers and issuing invoices for these transactions.
2. Financing Agreement: The business enters into an agreement with a confidential invoice financing provider, which is often a financial institution or an independent finance company.
3. Ledger Submission: The business submits its ledger to the finance provider, who then advances a percentage of the invoice’s value, typically ranging from 70% to 90%, to the business. Normally this is done on a monthly basis via reconciliation process.
4. Confidential Collection: The business retains responsibility for collecting payments from its customers. Customers are unaware of the financing arrangement, and they continue to make payments to the business. Any payments made to the business are made in to a trust account in the name of the business, but controlled by the financier.
5. Repayment: When customers pay their invoices, the business forwards the received payments to the finance provider to repay the advance, along with any fees and interest. Each month the payments received are reconciled and a new availability is generated.