A factoring company may require a contract commitment, this means in order to qualify for invoice factoring you would be agreeing to factor in a specified scenario. There are two parts to this process, first is to commit to factoring your receivables over a specific period of time, usually 12 months. So, in order to move away and find another source for funding you would be paying the amount of fees your contract stipulated to be generated over that time period. For example, if you signed a 12 month contract to fund an amount every month, the total amount of fees would have been earned during that time period, minus the fees you had paid up to the point of the factoring contract cancellation would be owed in order to free up your commitment. Because the factor has filed a Uniform Commercial Code (UCC-1) financing statement, your accounts receivable collateral would not be available until the contract terms had been met.
The second commitment, usually in tandem, is the monthly minimum commitment. This requires you to submit a minimum amount of invoices for financing every month. Those invoices would generate a minimum amount of finance fees over the period of the month. By not submitting the minimum amount of invoices for factoring, your reserve account would be deducted for the difference of the missing fees.
As a factoring company, Creative Capital Associates has no minimum commitments or requirements. You do not have to commit to a contract period for invoice factoring, this would allow you to leave once the outstanding accounts have been paid in full. Also you are not beholding to us for any monthly submissions of invoices. We earn your commitment by providing quality service. Not being aware of these commitments could create added expenses and hassle in the long run.