Repayment: Closing Out a Financed Invoice
Introduction
Repayment is the final step of the ILF cycle. When the customer settles the invoice, the financier releases the reserve — the portion of the invoice value held back at disbursement — after deducting its fees, and transfers what's left to the business.
What the Reserve Covers
At disbursement, the financier typically advances 70-90% of the invoice value and holds the remainder as a reserve. That reserve exists to absorb fees and to cover the risk of a short-payment or dispute before the customer's payment is confirmed.
- The financier confirms the customer's payment has cleared.
- Any short-payment or deduction claimed by the customer is reconciled against the reserve.
- The business is notified once the payment is matched to the original invoice.
What Gets Deducted
Before the balance reaches the business, the financier deducts its agreed charges from the reserve — commonly a discount fee (a percentage of the invoice value) and, in some structures, a separate service or administration fee. A well-structured agreement discloses these upfront, so the final amount received is predictable rather than a surprise.
What Happens If Payment Is Late or Incomplete
If the customer pays late, the reserve stays with the financier for longer, which can affect cash-flow planning; if recourse terms apply, the business may be responsible for covering a shortfall the reserve doesn't fully absorb. This is why reviewing recourse terms during provider selection matters as much as the headline advance rate.
Why This Step Matters
Clear, timely reconciliation at repayment is what makes ILF trustworthy as a recurring tool rather than a one-off transaction. Providers built on platforms such as CODIX automate the reserve calculation and fee breakdown, so businesses get a transparent statement rather than a manual reconciliation.