The invoice discounting process turns an eligible unpaid customer invoice into an agreed funding transaction. The practical work is checking what the customer owes, agreeing the advance and obligations, arranging payment and reconciling the transaction when the customer settles.
Use this guide to follow the stages and organise the records at each handover. If you are new to the terminology, start with our invoice discounting definition and key terms.
Our Invoice Discounting Solutions are for CSD-registered South African companies with completed, accepted and unpaid invoices tied to qualifying government or municipal tenders. Private corporate invoices are not eligible. The published standard minimum is R250,000, with funding from R250,000 to R8 million or more. There are no assessment fees; proposed funding costs appear in the written offer. Bring the invoice, awarded order or contract, acceptance evidence and current outstanding balance for assessment.
Fund The People offers funding approval within 48 hours for complete qualifying applications. Approval is separate from the release of funds, which depends on completing the agreed documents and payment arrangements.
1. Establish that the invoice represents completed work
Match the invoice to the customer order or contract and the evidence of delivery. The invoice should identify the correct customer, the amount outstanding and the agreed payment terms. Where acceptance or certification is required, include that evidence with the invoice.
Explain any difference between the original order and the amount invoiced. A partial delivery, returned item, retention or credit note can change the amount the customer accepts as payable. Listing the face value alone can therefore give an incomplete picture of the transaction.
- Customer order or contract and written amendments.
- Invoice number, issue date, due date and outstanding balance.
- Delivery note, acceptance record or service-completion evidence.
- Details of disputes, deductions, credit notes and previous payments.
- Details of any funding or assignment already attached to the receivable.
2. Complete the company and customer checks
The provider reviews the applicant and the proposed receivable under its own criteria. Prepare the company information, banking records and financial documents it requests. Identify the customer’s accounts-payable contact and explain how the invoice was submitted for payment.
Customer verification is a distinct stage. A provider may need confirmation that the work was accepted and that the amount is due. Sending an application does not mean those checks have been completed. Keep a record of outstanding questions and assign someone in your business to answer them.
3. Review the written funding offer
Before accepting an offer, identify the contracting provider and check which invoices it covers. Establish the gross advance, any upfront deductions, the net amount available and the treatment of the remaining invoice balance. Review security, guarantees, repayment responsibilities and charges if payment is delayed.
A percentage alone is insufficient for a cash-flow decision. Ask for the figures in rand and the dates on which money is expected to move. Our guide to comparing invoice discounting offers provides a fuller comparison checklist.
Worked settlement illustration
Suppose a fictional arrangement covers an accepted invoice of R400,000. The agreed gross advance is R320,000, with R8,000 deducted at release. The business receives R312,000 immediately. If the customer later pays the full invoice and a further agreed R12,000 is deducted from the R80,000 balance, the final payment to the business is R68,000.
Total cash received would be R380,000 and total charges R20,000. This example explains the arithmetic only; it is not a Fund The People quotation, standard advance percentage or complete treatment of tax and additional costs.
4. Agree verification, communication and payment instructions
Record who will contact the customer, where payment must be made and who will handle follow-ups. If the customer must acknowledge an assignment or change its payment instructions, establish who obtains and checks that acknowledgement. Your sales and accounts teams should use the same agreed instructions.
Confirm the buyer’s involvement before accepting the agreement. Invoice verification, an acknowledged assignment or revised payment instructions may require contact with the buyer. The written terms and actual payment process determine notification and collection responsibilities.
5. Confirm release and monitor the outstanding invoice
Distinguish an initial response, an approval and the release of cleared funds. Ask which documents, signatures and customer confirmations remain outstanding before release. Any quoted turnaround should identify its starting point and the conditions that must already be met.
After release, monitor the customer payment date and report material changes. A dispute, short payment or request for a credit note should reach the provider promptly. Keep the supporting correspondence together so the same facts are available to everyone responsible for the transaction.
6. Reconcile payment and close the transaction
When the customer pays, match the receipt to the correct invoice and obtain a settlement statement. Check the advance recovered, each deduction and any balance released. If the payment is partial or arrives in the wrong account, follow the agreement’s notification and transfer procedure.
Keep the final statement with the invoice and delivery evidence. Before financing the next order, update the cash-flow forecast using the actual cost and timing of the completed transaction. This helps identify whether the facility addressed a temporary payment gap or whether operating costs still exceed the business’s available margin.
Discuss your invoice with Fund The People
For a government or municipal invoice linked to completed work and a deal value of at least R250,000, contact our team to discuss our Invoice Discounting Solutions. Bring the invoice, completion evidence and payment terms so the enquiry starts with the transaction’s actual stage.