Factoring companies are banks, but banks are not factoring companies.
By the time an accounts receivable finance company gets itself established it is using an institutional bank line of credit for funding purposes. So you the client are actually leveraging the factors ability to borrow from a bank. What this means is, the factoring company has built into its rates the cost of money they are borrowing from the bank. In working in partnership with a bank the factor must adhere to methods and requirements imposed by the bank in order to keep an active line of credit. The bank may approve or require language in the Purchase and Sale Agreement contract as well as other verification documents.
On the other hand the bank is not set up to handle the transaction load that invoice financing requires. Each invoice has to be deemed acceptable to a creditworthy customer and tracked going out as the advance and coming in as collected. With fees deducted and reserve accounts forwarded back to the client. This whole process must be done with dedicated staff who know day in and day out how to interact with all the moving parts.
Keep reading about banks and factoring HERE.