Factoring Companies Guidebook

Invoices for contractually incomplete work i.e. invoicing for goods delivered under an Order or Contract which requires further deliveries before being fulfilled. This can also be in respect of services part performed.

Alternative terms:-

• Stage Invoicing
• Part Deliveries
• Progress Billing
• Interim Billing

See also: - 'Scheduled Orders'

Concerns

If the order or contract is not entirely fulfilled, then it may be considered void and payment therefore, not due. In the event of Client failure we would not generally wish to be involved in having to complete the order or contract ourselves and may not be in a position to ensure that this occurs i.e. under a Receiver. There may also be a potential claim for Liquidated Damages (see Contractual Sales).

Identification

Debts of this nature can be determined by a review of customer Purchase Orders, Sales Invoices, also through an understanding of the nature of the business. This type of invoicing is prevalent in the Construction Industry and Computer Industry, where there may be installation or training involved in the Contract. It may also occur where there are large values, long production time items e.g. overhead cranes.

Treatment

Where partial deliveries occur the terms of purchase, order or contract may contain a divisibility clause, also known as a 'cut off' clause i.e. each delivery empowers invoicing and payment. In certain industries these are also referred to as 'milestones' and these should be sought to accompany the relevant invoice as they should carry the signed authorisation, from the customer, to release payment.

With a confidential facility, reliance must be placed on the Client to identify these particular invoices, in order that their suitability for funding may be assessed.