Are you thinking of entering into an account receivable factoring agreement? There is a good that you can enjoy from this kind of contract because you are able to gain steady income and get to cover important expenses for your company, however, there are some things that you may not appreciate about it. A good knowledge of these will help you cope with the disadvantages; so that you can effectively deal with them, here are those disadvantages:

• You do not get the full amount. Since you are getting a middle man, which is the factoring company, to make things more favorable for you, you have to understand that the middle man is going to be earning a percentage from your supposed earnings. The initial amount you will receive is about 90%; the next 10% will be held back until the customer pays, but 1.5 to 2% will be deducted from it.
• You work with a middle man. You are no longer going to receive money from your clients. By selling your account receivable to another firm, you give them the right to do that for you and while this may be a plus in some ways, it can also be a disadvantage. What you have to understand here is that you are getting the money you need to get your business going. So you should not worry about anything anymore.
• You may lose your customers. Instead of getting your customers to come to you and instead of maintaining that open relationship that allows for you to interact with then, wherein you have the privilege of making more business with them, you basically giveaway the position that you have.

Disadvantages should not immediately discourage you.  You have to understand that there is a good and bad about everything and to be able to deal with what is going to happen, you need to be aware. Also, you should be sure to only deal with reputable and trusted companies, so that you can avoid getting yourself into trouble.