• Is Telephone Debt Verification A Problem?

    Are telephone debt verification problems affecting invoice finance companies?

    With the UK on lockdown, is telephone debt verification (TDV) a problem for invoice finance companies?

    First Deal Completed In April 2020

    Well on the first working day of April 2020 we had our first deal of the month paid away by one of our funding partners, after they had completed TDV on the debtor book.

    Of course this is not guarantee that all debts will be able to be verified, but it shows what can be achieved with a little perseverance. 

    Telephone Debt Verification

    When an invoice finance company takes on a new client, they are providing finance against the security of the company's unpaid sales invoices.

    Therefore, is one of the most important parts of their security process is verifying that the invoices, on their client's sales ledger, are valid, outstanding and payable.

    How TDV Works

    A simple way of doing this is to telephone the debtor, speak to someone that handles their purchase ledger, and confirm with them that they have received the invoice, it is valid, and will be paid in accordance with the terms. That processes referred to as telephone debt verification or TDV for short.

    The process may also be invoked for existing clients, as part of the ongoing security monitoring of the client's sales ledger. This may be randomly conducted, or conducted as part of regular audits (audits are reviews of a companies situation - normally involving a client visit).

    TDV And Remote Working

    With the outbreak of coronavirus, many staff are now working from home, and some businesses have closed down completely. This will be placing significant issues in the way of completing TDV.

    The amount of invoicing that an invoice finance company wish to verify, before paying away a new client, will vary between providers. Typically, we tend to find that 50% of the outstanding ledger needs to be verified, but that may vary.

    In the current circumstances, our example above demonstrates that TDV can still be achieved, even during a UK wide lockdown. However, it has to be accepted that this is not going to be universally true. In many cases, staff working from home will still have access to online accounting records, and they will be able to provide the reassurance required by an invoice financier. Indeed more and more businesses have moved towards electronic and cloud based access to accounting records, which will be proving very helpful in the current circumstances.

    Alternative Debt Verification

    Some funding partners have put in place alternative debt verification strategies. In some cases they are prepared to use email exchanges in order to achieve the verification that they need.

    Invoice Finance Is Still Available

    We have heard rumours that some funders are not in seeking to take on new customers during this difficult period. This would seem to be a very disappointing approach, particularly when UK companies are so desperately in need of the funding that they need to both survive this crisis, and meet the requirements for the production and delivery of orders required to help in the Government's preparations to fight the virus. We still have funding partners that are able to function and provide invoice finance for both new and existing clients, during the UK lockdown.

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Examples of just a few of our finance partners:

closebrothersinvoicefinance
igf
acg
castle
hitachi
marketfinance