We do not expect dilutions/erosions to change given that completed sales is intrinsic to the way invoice financing facilities work. However, an increase in dilutions could highlight pre-invoicing.
One common misuse of a CID facility is to assign the minimum predicted sales at the beginning of the month for the month ahead. In normal circumstances this minimum is hit and therefore the difference between predicted and actual sales is loaded towards the end of the month ahead of the monthly reconciliation. If sales unexpectedly drop, as will be the case for many clients, a credit note will need to be loaded to enable a full reconciliation. EQ Riskfactor can alert users to this using Covenants, and Focus Lists."— Andrea Tanner, Account Director