PACA Lenders

A factoring company has to be particularly careful when financing invoices related to agriculture products and services. Thanks to the Perishable Agriculture Commodities Act (PACA) which congress passed for the protection of suppliers and sellers of perishable agriculture products. Because the accounts receivable that is generated from the sale of perishable products can be liable to the Act it is cause for concern for commercial lenders. Like many well meaning laws enacted for the protection of hard working companies, the trouble is in deciphering the fine print. There are potential problems in the interpretation of how the Act offers protection as it pertains to a factoring company having to return proceeds paid on behalf of a customer. This is another instance of invoice factoring specialization. A few factoring companies work primarily with agriculture business and therefore know how to properly interpret the law. To read more detail on how the law works read this article by Andrew Cardonick.