What happens during an audit of an invoice finance facility?
Invoice finance providers carry out periodic audits, sometimes called ledger audits or debtor verifications, to check that the invoices on your ledger are genuine, undisputed, and relate to goods or services actually delivered. The auditor will typically contact a sample of your customers to confirm they have received and accepted the invoices. A clean audit result builds trust with your lender and can lead to improved advance rates or reduced fees over time.
What this means for your business
When you use an invoice finance facility in the UK, your lender has a financial interest in the debts on your sales ledger. To protect that interest, they carry out periodic audits, sometimes called ledger audits or debtor verifications, to confirm that your invoices are genuine, relate to goods or services that have actually been delivered, and are not subject to disputes or contra arrangements. In practice, an auditor will review your ledger records, cross-reference supporting documents such as purchase orders and delivery notes, and contact a sample of your customers directly to verify they acknowledge the invoices. For most SMEs, audits are straightforward if records are well maintained. A clean audit result builds confidence with your lender and can open the door to better advance rates or lower fees over time.
Key points
- Invoice finance audits are a standard part of most UK facilities, whether you use confidential invoice discounting or a disclosed factoring arrangement.
- The auditor will typically request supporting documentation such as signed delivery notes, purchase orders, and customer correspondence to verify that invoices reflect genuine completed transactions.
- Your lender may contact a sample of your customers directly to confirm they have received, accepted, and not disputed the invoices on your ledger.
- Audits can take place at your premises or be conducted remotely, and the frequency will usually be set out in your facility agreement.
- A consistently clean audit record can strengthen your relationship with your lender and may lead to improved facility terms over time.
Common pitfalls
One of the most common problems SMEs encounter during an audit is poor record keeping. If you cannot produce signed delivery notes, purchase orders, or clear evidence that goods or services were delivered, the auditor may query or exclude those invoices from your available funding. Raising invoices before a job is fully completed is another frequent issue that can trigger concerns. Contra arrangements, where a customer also supplies goods or services to your business, must be disclosed to your lender, as undisclosed contras are a common reason for audit complications. Keeping your ledger tidy and flagging any disputes promptly will make the process considerably smoother.
Related questions
How often will my invoice finance provider carry out an audit?
The frequency of audits varies by lender and facility type, but they are commonly carried out every six to twelve months. If your facility is new, or if your lender identifies any irregularities, audits may take place more frequently until confidence in your ledger is established.
Will my customers know they are being contacted as part of an audit?
Under a confidential invoice discounting arrangement, your lender should conduct any verification discreetly to avoid revealing the existence of the facility to your customers. Under a disclosed factoring arrangement, your customers are already aware of the lender's involvement, so contact during an audit is generally straightforward.
What happens if an invoice is found to be ineligible during an audit?
If an invoice is deemed ineligible, for example because goods were not yet delivered or a dispute exists, your lender may remove it from your available ledger and require you to repay any funding already advanced against it. It is important to keep your lender informed of disputes or credit notes as they arise, rather than waiting for an audit to surface them.
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 17 June 2026