Working Capital & Invoice Financing Scanner
Evaluates revolving working capital credit lines, invoice factoring agreements, merchant cash advances, and accounts receivable pledge notes for daily lockbox sweeps, customer notice clauses, and personal confessions of judgment.
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What to Watch Out For Before Signing a Working Capital & Invoices Agreement
Loan contracts are drafted by institutional attorneys to maximize lender security and minimize borrower flexibility. Understanding how individual provisions operate empowers you to negotiate fairer terms and avoid unexpected defaults.
High-Priority Risk Areas Specific to This Agreement
- 1Daily automated bank account debits and lockbox sweep mandates
- 2UCC-1 blanket lien encumbering all present and future company assets
- 3Full recourse chargebacks on disputed or unpaid customer invoices
- 4Severe default interest rate spikes (30% to 36% APR)
- 5Confession of judgment (COJ) and direct notification to client debtor base
Essential Clauses Analyzed by Our Engine
Lender forcing borrower to buy back invoices if customer fails to pay within 60-90 days.
Freezing company bank accounts and encumbering inventory, IP, and equipment.
Lender contacting your customers directly and demanding payments be routed to factor.
Severe penalties if business attempts to switch lenders or fails minimum monthly invoice quota.
Questions You Must Ask the Lender Before Signing
Never sign until you have received clear, written answers to these essential terms:
- •Is the factoring facility recourse or non-recourse in the event of customer insolvency?
- •Does the lender file a UCC-1 blanket lien or is the security restricted strictly to pledged receivables?
- •What are the minimum monthly financing volume fees if sales decline during seasonal slumps?