Customer Payments

When your customer sends a payment whether it’s by check, ACH, or wire the goal is for it to go straight to your factoring company. Once the factor receives it, they can deposit it into their account, even if the check is made out to your business. That’s because most factoring agreements include a power of attorney, allowing them to handle payments on your behalf.

Once your factor receives a payment, it usually takes about a day for it to show up in their system. That’s because most banks don’t give same-day credit for deposits. After the factor posts the payment, you’ll see it reflected in your reports. If the payment applies to invoices you’ve factored, they’ll match it to those specific invoices. If it’s a non-factored payment, it’ll simply show up as such in your account.

Every now and then, your invoice factoring company might get a payment that doesn’t clearly show which invoices it’s for. When that happens, they’ll reach out to you to help track down the remittance details so they can post it correctly, this happens frequently with ACH payments in which the client gets the remittance detail.

Until that’s sorted out, the money usually sits in an “Unidentified Cash” section of your account meaning it’s just parked there and not doing you any good. The quicker you can help figure out what the payment was for, the sooner those funds can be applied and put to work.

The good news is that your factor’s reports should make cash posting on your end much easier, they’ve already done the heavy lifting by matching payments to specific invoices. It’s a smart habit to post those payments into your accounting software daily so your books stay in sync with the factor’s records.