In the world of invoice factoring the biggest no-no is calling an account debtor (customer) and changing the payment instructions. Once financing commences every invoice payment MUST be sent directly to the factor. There are no exceptions. Even if a payment check may have partial funds that belong to you and haven’t been factored. The critical part of utilizing accounts receivable as collateral is, payments go directly to the finance company.
A notification letter goes out to each customer account acknowledging proper payment instructions. Once that notification has been received, no matter what the circumstances, you cannot legally change those instructions on your own. It’s a crime, you would be stealing, and you will be prosecuted. Your financing relationship will instantly be in default and your business will undoubtedly come to a screeching halt.
A word to the wise, don’t mess with payment instructions.
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