Warning: read your equipment and vehicle leases carefully to avoid tying up your cash flow management tools.

You need a photocopier for your office or a truck to deliver your merchandise. You decide to sign a lease and all seems simple – but, you may find yourself in a real bind when seeking business funding, later on.

How? If the company granting you a lease files a blanket lien on all your business assets – and not just on the copier or truck – you may be blocked from factoring receivables or otherwise seeking business financial help.

Follow these steps to keep your cash flow management options free and open.

  1. Before signing any lease, read the agreement carefully.
  2. Make sure that, on any documents that you sign, you only grant the leasing company the right to file a UCC Financing Statement on the piece of equipment or vehicle in question.
  3. Ask for a copy of the UCC to double check the assets being used as liens.

If you’ve already signed a lease that put a lien on all your business assets, ask the leasing company to release it on your outstanding account receivables. That way, you are free to begin factoring receivables as a business funding strategy.

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