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Confusion Around Commercial Financial Disclosure Regulations

Phil Cohen

There’s been a lot of confusion with the recent passing of commercial financial disclosure regulations (CFDR) in states like California, New York, and Utah. Businesses are struggling with how to create accurate and informative disclosures to comply with the new regulations.

CFDR Making it Harder for Factoring Companies

With all the confusion around trying to comply with the new CFDR, it’s increasingly harder for sales-based financing and accounts receivables factoring transactions. Because these types of transactions usually don’t have fixed terms or simply payment amounts and interest rates, these calculations are sometimes impossible and create more confusion for the parties involved.

There are several negative impacts the CFDR can have on factoring companies and factoring brokers. With the confusion around how to comply with these regulations, disclosure documents may be inaccurate or not informative enough, causing confusion to clients and leading to loss of business revenue.

How to Comply with CFDR

Staying on top of up-to-date information on CFDRs and how they vary in each state can help factoring companies and brokers comply with these regulations.

Commercial financial disclosure regulations generally require invoice factoring companies provide the following:

  • Financed amount – The sum disbursed to the client by the provider
  • Calculation of APR – An estimation of the annual cost of the client’s funding, including the amount and timing of the funding received, fees incurred, and payments made to the provider
  • Total finance charge – The sum of finance charges, specifying the amount and description of each expense, such as factoring fees, origination fees, etc.
  • Payment details – Information regarding the payment amount, frequency, and method
  • Estimated term – A summary describing how the provider calculated the term
  • Prepayment terms – A description of policies related to prepayment, including how the amount is calculated

Struggling to Find a Factoring Company?

If you’re struggling to find a factoring company for your business in states like California, New York, and Utah because of recent commercial finance disclosure regulations, you’re not alone. Factor Finders is still open for business in these states and can work with you to get your company the funding that it needs.

Complete the form to the right to get your California deal funded.

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Phil Cohen

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