Now that you are thinking about investing in Invoice Trading, let’s go through the risks associated with this asset class and how InvoiceInterchange manages these risks.


The main risks associated with Invoice Trading


Fraudulent invoices

This is a situation where an SME attempts to finance fictitious invoices.  Examples of fictitious invoices are:

  • the sale was not actually made,
  • the invoice value has been doctored to a higher amount.


Double financing

This is a situation where an SME obtains funding from multiple financiers against the same invoice.


SME enters liquidation

This is a situation where an SME who has been financing their invoices is no longer solvent and enters into administration to wind-up the company.  There may still be outstanding invoices that are pending payment from end clients.


SME’s end client enters liquidation

This is a situation where the end client of the SME goes into administration and there are one or more outstanding invoices that were funded but not yet paid.


How InvoiceInterchange manages the risks


At InvoiceInterchage, our core strength lies within risk management, with a team who have decades of experience in the banking and finance industry and risk management.  Our credit assessment and collection processes are designed to detect and minimise any potential default.  InvoiceInterchange performs rigorous checks and validation on SMEs and investors have access to all relevant information to assist in due diligence. Below are some of the policies and procedures that InvoiceInterchange operates under to aid in protecting your investment. 


First and foremost, our invoice finance facility is with full recourse.  This means, in the event the end client refuses, is unable to pay, or there is non-payment (e.g. dispute, credit notes, client goes into administration), the SME will be obligated to repurchase the funded invoice in full including all associated fees. 


In addition, we would require a Personal Guarantee from one or more Directors and Shareholders of the SME. The personal guarantor would also be legally liable to repay what is owing on the facility.


An overwhelming majority of our portfolio consists of disclosed facilities. A disclosed facility is when the end client is informed of the financing arrangement entered by the SME and agrees to pay InvoiceInterchange directly.  This helps ensure payment against the funded invoice is paid directly to our investor trust account, as well as eliminate double financing risk.


Prior to making invoices become available for investment, InvoiceInterchange will conduct invoice verification to minimise any potential fraud.  This includes but not limited to:

  • All supporting documents must be provided by SMEs to prove the sale transaction. For example, Purchase Orders, Signed Contracts, Delivery Sign-offs, Proof of Completion, Delivery Orders etc.
  • Obtaining access to the SME’s client-supplier portal to verify the invoice.
  • Obtain verbal verification on the invoice from the SME’s end client.
  • Identify any suspicious invoices or activity based on our platform’s historical trading data.


If you would like to learn more or discuss investing in Invoice Trading with InvoiceInterchange, talk to one of our team members.




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