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The receivables-based financing, which encompasses asset-based loans, factoring (in which a company actually sells its invoices), and related credit mechanisms, is no panacea. Pledging receivables and getting advances against them can cost 30% to 40% more than an unsecured bank line, for example. In addition, "The CFO enters a different world", one that often entails more-rigorous reporting on accounts receivable and collections while providing less flexibility in negotiating terms with customers. And, in some cases, the lender comes to have an iron grip on the company's cash flows. "It can result in a big loss of self-esteem and independence".
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