An Extra Layer of Protection for Banks – Milberg Factors

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How BANKS AND BANK GROUPS Can safeguard their collateral

It’s no secret that retail has seen better days. According to, one fifth of the largest bankruptcies by public companies in 2017 were in retail. Because banks and their clients, and the retailers they sell to, are intimately connected, so is the financial risk. As the first lien holder on their clients’ assets, the bank holds receivables due from retailers as collateral. Yet whether a client’s sales are up or down or whether the client’s balance sheet is weak or strong, if those retailers go bankrupt, the bank can see a significant loss. Fortunately, there is a smart and simple way to help safeguard the bank’s financial investment — factoring, an often misunderstood and overlooked solution.

Entrepreneur defines factoring as “a financing method in which a business owner sells accounts receivable at a discount to a third-party funding source to raise capital.” While that is certainly one of the services a factor can provide, it is hardly the only one. In fact, in many cases, the factor does not even act as a lender. 

When a bank asks us to factor a client’s A/R, it’s because they want greater protection for the A/R they’re lending against.

The heart of old-line factoring is offering credit protection, underwriting the credit risk on accounts receivables. “When a bank asks us to factor a client’s A/R, it’s because they want greater protection for the A/R they’re lending against,” says Daniel R. Milberg, President of Milberg Factors, Inc., a leading, privately held firm focused on factoring and receivables financing. “This is a win-win for both the lender and the client, as it helps reduce the financial risk for the bank, while keeping their client’s business healthy.” Additionally, as part of a factoring relationship, the client outsources the administration of the receivables. “As a factor, we service those receivables, making the collection calls on past due invoices and applying the cash on the invoices that get paid. In certain cases, we’re also asked to manage the loan for a bank, monitoring the collateral, providing reports to the bank, and participating in the financing.”

Milberg Factors is frequently called upon by another lender or group of lenders to help them achieve greater control over their collateral by offering credit protection, receivables management and collateral reporting. At times, Milberg Factors is asked to get more involved in the situation and monitor the collateral, manage the loan, and participate in the financing.

Milberg Factors is a well-capitalized, financially stable firm with deep financial resources and an 80-year track record. We offer flexible product structures across many different industries, tailored to meet the needs of particular situations. Milberg Factors has a seasoned management team with an experienced credit department, A/R staff and operations team in place to help deliver the first-class service our clients and bank partners expect.

Credit Protection and Management

  • Review and analyze the credit strength of our client’s customers and  establish customer credit lines
  • Factor the client’s receivables to provide the lending group with maximum  control over the A/R collateral
  • Take risk of loss for an account debtor’s financial inability to pay
  • Eliminate/reduce bad debt expense

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3rd Party Accounts Receivable Management

  • Outsource back office services, including collections, cash application,  deductions and dispute identification
  • Forward cash to lender to apply to the client loan or remit cash directly to  client, as directed

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Loan Management (Optional)

  • Perform our own investigation of the bank’s or bank group’s client to make  an independent assessment of the client’s financial condition and future  prospects
  • Participate in the financing of the client
  • Make loan advances on behalf of the lending group
  • Issue reports to the lending group at least weekly on the loan balance,  open L/Cs, collateral balance and month-to-date loan and collateral activity

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The bottom line: Milberg Factors never seeks to compete with banks, but rather brings added value to existing and new bank client relationships. Through credit protection and monitoring, and accounts receivable management, we help add an extra level of security — and that’s good for everybody’s business.


For more information about Milberg Factors, Inc., please contact Daniel R. Milberg at (212) 697-4200, David M. Reza at (818) 649-7587, Ernest B. White at (336) 714-8852, or write to