More Small Businesses Are Selling Receivables at a Loss

In February 2010, Tiffany Bucher’s bank sent her an e-mail she assumed was a mistake: Her company’s checking account had been frozen and her $150,000 line of credit was being pulled. She later learned that the bank’s new president was nervous because Bucher’s company was involved in a lawsuit and its financial records were disorganized. “We had never missed a payment. I had $80,000 in payroll due the next morning. I was completely panicking,” recalls Bucher, president of Infincom, a Phoenix-based office equipment and software dealer.

Although she insists the company was having no trouble making its $546 monthly loan payment, Bucher couldn’t persuade her banker to change his mind. (The bank’s president did not respond to a request for comment.) So the next day, she turned to a commercial finance company, Factors Southwest Funding. FSW Funding covered her payroll obligation within 24 hours and she now uses the company regularly. “Factoring has been my life saver,” says Bucher, whose 48-employee company had $8.5 million in revenue last year.