Once a business owner becomes aware of factoring they will have to consider whether to try and secure a line of credit from a bank or use accounts receivable financing to grow their company. When you get a loan from a bank, the amount of credit will always be limited to the historical ability to pay. The monthly payment is based on the probability it will leave enough profit to continue to run the business. Rarely do we find a business owner with the dedicated discipline to pull money out of the bank line and then go back and replace it when they get paid on an invoice. Essentially that is what a line of credit is for; to self factor your own receivables.
Instead, the LOC starts getting eaten up over time when cash flow is tight. After a while the workout department at the bank will set aside the old LOC as a term loan with monthly payments. Because the LOC was secured by the business assets of the company there is nowhere to go to get more capital until the note is paid in full.
In contrast, a factoring company is an excellent alternative for a company in a growth mode. By factoring your invoices the discipline is built in to the transaction and there is no top end credit limit, no need to requalify for increases to the line. As long as you grow and have fresh invoices you can always get funded. And when the invoice is paid by your customer, the transaction is completed. No long term liability that has to be retired.