Updated on June 12, 2025
Businesses that use factoring to manage their cash flow often face unexpected delays due to UCC-1 filings. These filings can cause bottlenecks in the approval process, making it harder for companies to access the funds they need quickly.
Understanding why UCC-1 filings hold up traditional factoring is important for any company that wants to improve its access to cash. Reliable industry details, such as those found in UCC-1 filing invoice factoring, highlight the need to be aware of how these filings affect business operations.
Once a UCC-1 filing is recorded, it shows the factor’s claim on a company’s accounts receivable. This public filing stays in the records until officially terminated.
New factoring arrangements can be delayed because other lenders will see the active UCC-1 and may require it to be released or changed first. More details can be found in this UCC-1 filing in invoice factoring article. Businesses can also learn more about the Uniform Commercial Code influence on invoice factoring.
A UCC-1 filing stays effective for five years after it is first filed. During this period, the lender’s claim on the receivables remains active and limits their availability for new loans or factoring from other lenders.
This can restrict businesses from accessing other liquidity solutions. More about how UCC-1 filings affect receivables is explained on the UCC-1 filing duration law page.
Duplicate collateral claims are a leading reason for slower approval times in factoring deals. When multiple lenders file claims, it can be difficult to establish who has priority.
A UCC-1 filing in invoice factoring shows these claims in public records, which lenders review before approving any funding. This check is not optional and adds extra due diligence steps.
Businesses should clear up any old liens before starting the process. For more details on collateral considerations in factoring arrangements, see this internal resource.
UCC-1 filings must go through a state-designated office, such as the Secretary of State. This process is not instant and can create a waiting period before a lender or factor can move forward.
Each state handles UCC-1s differently, but most require electronic or in-person submissions and processing time frames can vary. Details on state filing processes for UCC-1 statements help explain why businesses face these delays.
For more detail on how UCC-1 filings can impact factoring, visit the UCC-1 filing in invoice factoring page.
Factoring companies carefully inspect public records to check for current UCC-1 filings before approving new financing. This process protects their interest by ensuring no other lender holds a claim on the receivables.
Verifying these filings takes time and can delay funding. More businesses are finding that UCC-1 filing in invoice factoring creates additional steps. Businesses should review relevant details about the Uniform Commercial Code and invoice factoring for better preparation.
When a business has a pre-existing UCC-1 filing, factoring companies see a claim already placed on the accounts receivable. This makes it harder for new factors to secure their own interest in those invoices.
Due to these existing liens, fewer invoices meet the requirements for traditional factoring. For details on how this impacts funding, visit UCC filing in factoring or check this blog about UCC-1 filing invoice factoring.
The first-to-file rule in the UCC-1 process sets the order of priority for claims on collateral. This means a new factor must confirm if they can secure a top position before moving forward with funding.
Reviewing security interests is required to be certain there are no hidden claims. For more detail about the priority rules under Article 9 of the Uniform Commercial Code, visit this resource. Learn how lien and UCC-1 issues impact cash flow at factoring and accounts receivable.
Lenders see multiple UCC-1 filings as a warning sign. It shows that a business may already have significant debt or outstanding obligations to other creditors. This makes lenders more cautious.
Because of this risk, lenders often take longer to review applications. They need to check each lien and consider if any assets are already secured. This thorough review increases underwriting time when compared to businesses without several liens.
Additional details about how UCC lien data points help lenders identify risk can explain why these reviews slow the process. For an overview of how UCC filings affect business credit, see UCC filings and business credit scores.
When a business uses factoring for several years, the factoring company is required to file UCC continuation statements. These must be filed every five years if the original UCC-1 financing statement is still active.
Missing a filing deadline can cause a loss of lien protection. This step adds more paperwork and tracking for factoring companies, which can delay traditional factoring.
Factoring companies must verify UCC-1 filings before approving funding requests. This means performing a UCC search to check for any existing claims against a business’s collateral, which can take additional time. According to best practices for UCC filings and searches, missing or incorrect information can lead to even more delays.
If a business has a record of past financings, each must be reviewed and confirmed, further slowing the approval process. Details about the UCC-1 financing statement process show the importance of accuracy and careful tracking, which adds mandatory steps to traditional factoring.
Overlapping UCC-1 filings often lead to disputes over who has the priority claim on collateral like accounts receivable. These conflicts stop lenders from moving forward until the issue is resolved.
When multiple creditors file on the same assets, it can take extra time to sort out the priorities among conflicting security interests. This slows down the process and impacts a business’s ability to access cash quickly through factoring. For details about how these issues arise during UCC filings, see this guide on UCC filings: the good, the bad and the litigious.
Factoring contracts usually have specific clauses about the status of any UCC-1 filings. These clauses require review by legal teams to confirm all terms are clear and valid. This process often slows down funding for businesses since each clause must be checked.
Some contracts reference blanket liens or limitations on using invoices for other loans. This creates extra steps for attorneys. For more on how the Uniform Commercial Code impacts these agreements, see the Uniform Commercial Code factoring guide.
A detailed review helps avoid problems, but it adds time. These delays can be a major issue for companies needing quick access to capital. For a deeper look into why UCC-1 status matters, visit this UCC-1 filing in invoice factoring overview.
When a lender files a UCC-1 statement, it places a public claim on a business’s assets. This creates a barrier for other lenders or factors.
Before any new invoices can be factored, the initial UCC-1 claim must be checked and, if necessary, cleared. This clearance process adds wait time and limits access to factoring options. Businesses should review the UCC-1 financing statement process to understand its impact. Find more details on UCC filings and creditor rights.
UCC-1 filings and factoring both play key roles in business financing. These elements can decide how quickly companies receive working capital and how lenders protect their interests in business assets.
A UCC-1 financing statement is a public record document that gives notice of a secured party’s interest in specified business assets, like accounts receivable or equipment. When filed, it puts other lenders on alert that the creditor has a claim on the listed collateral.
Businesses must be aware that a UCC-1 filing can limit their access to new loans secured by the same assets. The statement is usually filed with the Secretary of State and is easy to find in public databases. Properly filing and tracking UCC-1 statements helps avoid accidental default and confusion with other lenders. In factoring deals, the UCC-1 makes a factor’s claim clear, reducing legal disputes over ownership of receivables. For more detail, the article "what is a UCC filing in invoice factoring" from Bankers Factoring explains how a UCC-1 works in a real factoring arrangement: https://www.bankersfactoring.com/what-is-a-ucc-filing-in-invoice-factoring/
Factoring allows a business to sell its unpaid invoices to a third party, called a factor, for quick cash. The factor provides a portion of the invoice value upfront and pays the rest after collecting from the customer.
The process includes evaluating the creditworthiness of invoice customers, setting up the purchase agreement, and filing a UCC-1 to secure the factor’s rights to the receivables. Filing the UCC-1 is crucial—it prevents a business from using the same invoices as collateral for other loans, stopping competing claims from multiple lenders.
Steps to expect in the factoring process:
For a more detailed guide, visit "ucc-1 filing in invoice factoring" at ResolvePay: https://resolvepay.com/blog/ucc-1-filing-invoice-factoring
Delays with UCC-1 filings often occur due to issues with lien priority and slow processing at state offices. These slowdowns can stop businesses from accessing funds quickly or cause lenders to reconsider funding options.
When a lender files a UCC-1 statement, they are securing their place in line to collect on a debtor’s assets. Before funding, lenders conduct detailed lien searches to confirm they have first position on the collateral. If another lender has a prior UCC-1 filing or there are errors with the recorded information, it can result in disputes, needing extra documentation, or renegotiation of terms.
Any conflict between existing and new liens may force businesses into time-consuming legal reviews. In some cases, companies must request lien releases or subordinations to solve conflicting claims. Disputes in lien priority not only slow down access to factoring but can also impact a business’s ability to get other credit or loans. For more on lien searches and lender strategies, see common concerns of businesses that file their own UCC filings.
Each state processes UCC-1 filings at different speeds, depending on how filings are submitted and internal workloads. Some agencies may only accept paper forms, which adds days or weeks to the process. Mistakes, such as missing attachment pages or incorrect fees, result in rejected filings, requiring businesses to resubmit and wait again.
Businesses must prepare documents carefully to avoid clerical errors. Coordination with state offices is often needed and delays in communication can push back funding timelines. Incorrect filing information, such as errors in debtor names or addresses, commonly leads to additional delays and increased administrative work. Details about UCC-1 filing offices and required methods can be reviewed at UCC-1 financing statement secured transactions notice filing.
UCC-1 filings play a direct role in delaying or complicating traditional factoring agreements. Businesses need to know how filings, amendments, and terminations affect funding opportunities and what to do if issues arise.
UCC-1 filings act as public notices showing that a factoring company has a claim on a business's accounts receivable. This claim can make it harder for other lenders to work with the same receivables.
Potential lenders may refuse to advance funds if a UCC-1 is already attached to the receivables. For a detailed explanation, review how factoring companies use UCC-1 filing in invoice factoring.
A UCC-3 amendment or termination can update, change, or remove a claim on receivables. This step is necessary to release the collateral when the underlying debt is satisfied.
Without a proper UCC-3 filing, the previous claim remains on record, causing roadblocks for new financing options. More information is available in guides about handling UCC filings for businesses.
Delays often happen because it takes time to process UCC-1 filings through state offices. Administrative backlogs and mistakes in the filing process are frequent causes.
Duplicate filings and disputes over collateral claims can also slow down approval for traditional factoring agreements. These issues directly affect how quickly a business gets funded.
Most factoring companies require a UCC-1 filing to protect their interest in the receivables. This filing is not always legally mandatory, but it is standard practice.
If a UCC-1 is not filed, another lender may claim a prior right to the same collateral, increasing risk for the factoring company and potentially restricting a business’s access to funds. More detail can be found on the impact of UCC-1 filings on your business.
A UCC search can be completed by checking the state’s online business portal or visiting the Secretary of State office for public records. The process helps a business identify any existing UCC-1 claims.
Knowing what liens are on file helps avoid surprises when seeking new financing. For state-specific guidance, refer to Louisiana Secretary of State UCC FAQ.
UCC-1 filings “lock” the receivables for up to five years, which can prevent other lenders from using the same collateral. This restriction limits a business's funding options during the duration of the filing.
Before making a new factoring agreement, companies often need to resolve existing UCC-1 claims, leading to further delays and possible lost funding opportunities. For a full overview, visit the article on how UCC-1 influences invoice factoring agreements.
This post is to be used for informational purposes only and does not constitute formal legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Resolve assumes no liability for actions taken in reliance upon the information contained herein.