11.1 The Schedule of Accounts
Processing The Schedule of Accounts
ANAPLANS will instruct their Clients on how to send in a completed Schedule of Accounts for funding, all of the information below must be included:
- The invoice date;
- The invoice number;
- The customer’s name;
- The invoice amount;
- Invoice Terms;
- The client signature and the date of the signature at the bottom of the form; and
- Original invoices with copies of the related purchase order, proof of delivery
ANAPLANS will compare the invoices to the Schedule of Accounts for accuracy and also confirm the following;
Does the amount of the invoices recorded on the Schedule of Accounts match the attached invoices; and
Recalculate and compare the invoice total to the amount reported on the client’s form
11.2 Verifications
On a sample basis, ANAPLANS will confirm receipt of the services or goods with customers by telephone, fax, or on a courier’s website if the goods were delivered by a carrier such as FedEx, UPS or DHL, etc…;
11.3 Paper Verification
ANAPLANS will review the purchase contract to the invoice to confirm that the client is in compliance with the terms and conditions of the purchase order or purchase contract.
For example, does the pricing match? Will the goods arrive by the required date?
11.4 Telephone Verification
ANAPLANS will contact the client’s customer to verbally confirm that the goods have been received or that the services have been provided. ANAPLANS may contact a purchasing agent, warehouse manager or the Accounts Payable department at the customer’s office.
It is important that ANAPLANS obtain the phone number for the client from a third party (other than the client). ANAPLANS may obtain this number from the Credit Insurer (provided the customer has been pre-approved for insurance), or by using the Internet or other phone directories.
11.5 Email Verification
Similar to the Telephone Verification above, ANAPLANS can attempt to contact the customer via their email. Typically this is used for on-going verifications and after ANAPLANS has developed a rapport with the customer.
11.6 Shipping Verification
ANAPLANS can track shipments online via a common carriers website if client shipped goods to customer via common carrier. ANAPLANS can usually obtain a tracking number or “pro” number off of the shipping documentation supplied by the customer.
11.7 Fax Verification
In some cases ANAPLANS may elect to send a letter to the customer requesting confirmation of an invoice. ANAPLANS should always seek to obtain the fax number from an alternate source (other than the client).
11.8 Estoppel Letter Verification
The Estoppel Letter Verification is the most firm form of verification that ANAPLANS can obtain. Basically estoppel language is used to protect ANAPLANS against the customer asserting a different claim after the fact. In an estoppel letter the customer confirms they have received the goods or services listed on the invoice and will pay the invoice in full and to ANAPLANS and within terms.
The estoppel letter states that ANAPLANS is relying upon the customer’s acknowledgment of the language above in order to advance funds to the client. This form of verification is not recommended for use 100% of the time as it sometimes is difficult to obtain the customer’s signature. However, in instances such as when a Contra exists, the Estoppel Verification is required.
11.9 Credit Insurance Limits
ANAPLANS must check to be sure that the Insurance Provider has approved credit limits for each customer. ANAPLANS must always verify the client is covered under an assigned policy or the ANAPLANS policy.
11.10 Review the A/R
For existing customers, review the client account to ensure they are not past due and that the total amount owing is under the customer’s credit limit;
ANAPLANS may also view the collection report to see what the status is on open invoices.
11.11 Mail the invoices
Make a copy of all of the invoices and supporting documents. Note: it is advisable for the client to supply the second copy in order to save time.
11.12 Reasons Not to Fund
ANAPLANS should not fund invoices if any of the following apply:
- ANAPLANS has not sent a Notification Letter to new customers;
- It is not possible to confirm receipts of goods or services of a sufficient number/high enough value of invoices;
- There is no credit insurance approval for a customer; or
- There is no proof of delivery/shipment.
11.13 Steps to Funding
After the above steps have been completed, a ANAPLANS may begin the process of funding the client. ANAPLANS funds a client by completing the following administrative procedures:
Complete one copy of the Schedule of Accounts form:
- Calculate and enter the reserve amount in the field beside “Reserve”;
- Calculate and enter the discount amount in the field beside “Discount Fees”;
- Enter any special deductions in the field beside “Adjustments” with an appropriate description on an attached sheet; and
- Calculate and enter the net advance in the field beside “Check Amount”;
- Stamp the client’s invoices with the assignment stamp;
- Copy the client’s invoices;
- Mail the invoices to the client’s customers;
- Fund by cheque or wire transfer to client bank account.
- Enter the purchase in the accounting system;
- File the documents.
11.14 Overview of Reserves
The reserve is a general amount held against the total receivables of a client and is not invoice specific. Clients, especially those who have never used the services of a factor, may initially view it as invoice specific.
ANAPLANS should clarify any such misapprehensions. Reserves exist for ANAPLANS to use as they deem reasonably necessary, so that they are covered against any potential credit losses, future customer deductions and/or any additional charges that may be levied against the client. Reserves allow ANAPLANS to spread the risk among all of a client’s customers.
Generally ANAPLANS’ reserves are set at 20%. However, this amount may vary. For example, if a client has or is experiencing a high level of deductions each time a customer makes a payment, ANAPLANS may consider a higher reserve; conversely if the deductions are very low, ANAPLANS may consider a lower reserve.
ANAPLANS should reimburse client reserves when they receive payments that bring the reserve significantly above the target percentage.
However, before reimbursing a client for all of the excess reserve:
- Recover any out-of-pocket expenses that are due from the client
- Reduce the reserve for any charge backs for overdue invoices
- Reduce the reserve for any additional discount fees that may be owing
- Recover any funds the client collected directly for invoices which the ANAPLANS originally funded. (Client cashed a customer check)
Prior to issuing a reserve disbursement, ANAPLANS should ensure that the amount of reserve is sufficient to cover all known losses, adjustments, etc.