What might lenders require before approving invoice financing?

Lenders typically focus on the creditworthiness of customers before approving invoice financing because the repayment of the financing is fundamentally dependent on the customers' ability to pay their invoices. If customers have a solid credit history and are considered reliable, lenders are more likely to feel secure in offering invoice financing. This assessment helps lenders determine the risk associated with advancing funds based on the outstanding invoices, as any defaults in payment from the clients could directly impact the lender's recovery of the financed amount.

Detailed reports of business assets and evidence of previous profitable years may be relevant in broader lending scenarios, but they do not specifically address the nature of invoice financing, which focuses on the relationship between the business and its customers. Projected future sales forecasts can also be considered, but they do not directly assess the immediate risk involved in collecting on the issued invoices. Therefore, the review of customer creditworthiness is the primary factor in deciding whether to approve invoice financing.