If a bank has a lien on your company’s accounts receivable, you should let the factoring company know right away. They will usually ask the bank to subordinate that lien. Some banks will accommodate the request and others may decline depending on your circumstances. Many loan officers are willing to help out the client in cash flow needs. Banks are very familiar with this kind of interim financing. The other alternative is to pay off the loan if there is plenty of receivables to leverage the buy out.
With small businesses, it is even more important to free up working capital through factoring. The money can be invested into new equipment, used to pay bills, or used toward payroll. Of course, the alternative is to chase the customer for the invoice payment and defer everything else while the money is tied up in the collection process.
Factoring Accounts Receivable Rates As Low As 1.5%
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