Is it possible to factor accounts if I have a small business loan?
Yes, not only is it possible but is done quite frequently. You just have to understand how it works. The first thing that you need to establish is what size line you will need and which invoices you are going to sell so that you can utilize them as collateral when factoring accounts while making sure that they will work with your already existing line without jeopardizing the bank’s collateral position.
One of the biggest mistakes that a business makes is not approaching their banker with a well thought out plan or thinking that things will just sort themselves out. Your banker wants to see your business grow so they can increase your line but you have to increase your collateral position at the same time for them to be able to accommodate.
If you can show them how this will not interfere with their collateral and will increase your cash flow and your business the transition can be very smooth. The biggest difference between successfully or unsuccessfully factoring your accounts while having a loan comes down to communication between all parties involved in order to prevent last minute surprises.
You need to select a factoring company and be very clear with them on which customers you would like to factor. Make sure that they are comfortable and get them to work with your banker as soon as possible. The better the communication the higher the likelihood that everything will go well and your company will be able to utilize the factoring line to take your business to the next level.
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