Here's What I Do When Funders Write To Your Customers.
Customer notices are the cruelest thing funders do. Not the most expensive, the cruelest. A UCC notice of assignment tells your customers to pay the funder instead of you, and it arrives looking like a court order. Your customers don't know what it means. They just know their vendor is in trouble.
First, I get the notice and read what it actually claims. Last spring it was a beer distributor in Philadelphia. Forty accounts, $88,000 advance, two big bars closed in a month. The letters went out thirty days after default. Two accounts stopped ordering because they assumed he'd sold the business. One bar double-paid, then short-paid him the next month. Receivables down 35 percent in three weeks.
Second, I demand proof. Proof the assignment is valid, plus an itemized balance, in writing. Took them three weeks to produce both. Their paperwork had gaps you could drive a truck through. Funders send these notices fast and document them slowly. That gap is leverage.
Their lawyer called the demands fishing. I told him fishermen catch things, which ended that objection. Three weeks later the documents arrived, incomplete and damning at once. Half the balances didn't match the notices. I highlighted the gaps and sent them back. Funders who document slowly usually have a reason. The reason is never good for them.
Third, the client does the human part while I do the legal part. He drove his route with a one-page letter saying he was operating and disputing the balance. A bar owner he'd served six years called to ask, gently, if he was okay. Not angry. Worried, like he'd heard about an illness. That call cost the funder more goodwill than any motion I filed.
We made withdrawal of the notices part of the deal. $33,000 structured over ten months, notices pulled within five business days of signing, and a UCC lien termination filed and confirmed. He lost two accounts permanently. The other thirty-eight stayed. The letters did more damage in a month than the default itself.
No broker mentions customer notices at signing. They never do. Ask yours about assignment clauses before you sign and watch the subject change. That subject-change is worth more than the brochure.
One more thing. If your customers get letters, tell them the truth fast. Operating, disputing, notices are part of the dispute. Silence lets them write their own story, and their story is always worse than yours.