What an Invoice Finance BDM Checks Before Approving Your Facility: A Complete Guide for UK SMEs

Before an invoice finance facility is approved, a business development manager reviews your debtor book, customer concentration, aged debt, contracts and management information. Knowing what they look for lets you prepare a stronger application and avoid delays or a lower advance rate.

Why the BDM Looks Past Your Turnover Figure

Invoice finance is secured against your sales ledger, not your balance sheet, so a BDM's first job is to understand the quality of the debtors behind your invoices rather than the size of your business. A £2 million turnover company with three strong, paying customers can be an easier approval than a £5 million company with two hundred small, slow paying debtors.

This is why the initial conversation often focuses on who your customers are, how long you have traded with them, and how reliably they pay, before any numbers on a bank statement come into it. Providers are ultimately lending against the promise that your debtors will pay, so the BDM is building a picture of how safe that promise is. Expect early questions about your top ten customers by value and how long each relationship has run.

Customer Concentration and Debtor Spread

One of the first calculations a BDM runs is customer concentration: what percentage of your ledger sits with your single largest debtor. Most providers get uncomfortable once one customer represents more than 20-25% of your total debtor book, because a dispute or insolvency with that customer would hit the lender's security hard.

High concentration does not automatically mean rejection. Some providers will still fund a concentrated ledger if the debtor is a strong covenant, such as a listed company or public sector body, but they may cap funding against that debtor specifically or ask for credit insurance. If your business genuinely relies on a small number of large customers, be ready to explain the relationship history and any long term contracts in place, since this reassures the underwriter that the concentration is stable rather than risky.

Aged Debt and Payment History

The BDM will request an aged debtor analysis, a report showing how much of your ledger falls into 30, 60, 90 and 90+ day buckets. A ledger where most debt clears within 30-45 days signals reliable customers and disciplined credit control. A ledger with a large tail of debt sitting beyond 90 days suggests either slow paying customers or unresolved disputes, and this directly affects the advance rate offered.

Persistent aged debt on specific accounts often gets excluded from the funding base entirely, meaning you will not be advanced against those invoices even if the facility itself is approved. Before applying, run your own aged debtor report and be ready to explain any invoices sitting in the 90+ day column, since a credible explanation, such as a retention clause or agreed payment plan, carries far more weight than silence.

Contracts, Terms of Trade and Dispute History

Underwriters check whether your terms of trade are clearly documented and consistently applied, because invoice finance relies on enforceable debt. If your invoices reference payment terms that customers do not actually follow, or if you have no signed terms of business at all, this weakens the security a lender is being asked to fund against.

Expect questions about retentions, especially in construction and similar sectors, since retained sums are typically excluded from funding until they fall due. The BDM will also ask about past disputes, credit notes and returns, as a high rate of credit notes against invoices already funded is a common cause of clawback. Bringing your standard terms of trade, any framework agreements, and a short note on dispute history to the first meeting speeds up this stage considerably.

Management Information and Financial Position

Alongside the ledger itself, the BDM reviews your management information: recent management accounts, year end accounts, VAT returns and, for newer facilities, a short cash flow forecast. This is used to sense check that the business generating the invoices is trading normally and is not showing signs of financial distress that could affect service delivery to your customers.

Directors should also expect a credit check and, in most cases, a request for a personal guarantee, alongside standard KYC identity and Companies House checks. Being upfront about any County Court Judgments, HMRC arrears or director disqualifications avoids delays later in underwriting, since these will surface regardless and are viewed far more favourably when disclosed early rather than discovered independently.

How to Prepare Before the BDM Visit

The applications that move fastest through underwriting are the ones where the business has already assembled its own paperwork rather than waiting for the provider to chase it. A short pack covering your top ten debtors, an aged debtor report, your standard terms of trade, last two years of accounts and current management accounts covers most of what a BDM needs at the first meeting.

It is also worth being candid about anything that might look unusual on paper, such as a recent large one off invoice, a customer dispute now resolved, or a change in payment terms with a key account. Underwriters are used to seeing normal business complications; what slows a facility down is information surfacing late that looks like it was being hidden, so front loading the explanation is almost always the better approach.

Checklist

• ☐Prepare a list of your top ten debtors by value with relationship length
• ☐Run an aged debtor report and be ready to explain anything over 90 days
• ☐Gather signed terms of trade and any framework or retention agreements
• ☐Have your last two years of accounts and recent management accounts ready
• ☐Disclose any CCJs, HMRC arrears or director issues upfront rather than waiting
• ☐Note your customer concentration percentage before the BDM asks for it

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