CASH Act

This bill sets a national rule to help small businesses understand invoice factoring deals. If a small business is selling its unpaid invoices (accounts receivable) to get cash now, the company offering the deal must give a clear, written summary before the business signs—when the total factoring amount is under $500,000 or not stated but expected to be under that amount. The summary has to spell out the discount taken from each invoice, all fees, any money held back in a “reserve,” how long the contract lasts, and a simple example using a $10,000 invoice that shows the net cash the business would actually receive. A “factoring transaction” here means selling existing unpaid invoices for goods or services already delivered; it is not a loan based on future invoices. States cannot add different or extra disclosure rules beyond this federal standard.

Key points

• Who is affected: Small businesses that use invoice factoring, and the companies that buy their invoices.
• What changes: A required, easy-to-read disclosure before signing, including discount/percentage, all fees, reserve terms, contract length, and a $10,000 example showing the net payout.
• When it applies: Before entering a factoring agreement, when the total amount is under $500,000 or not specified but expected to be under that amount.
• Where it applies: Nationwide; states cannot impose additional or conflicting disclosure requirements.