Account control

The factor authority over the bank account where customers send payments.

Why it matters

Account control gives the factor the ability to collect directly from account debtors without needing the seller to forward funds, reducing the risk of misdirected payments and improving factor position in the event of seller insolvency. A deposit account control agreement (DACA) allows the factor to sweep funds from a seller bank account under specified conditions. The degree of account control varies by program: some factors have full dominion rights; others operate with a more limited monitoring arrangement until a default occurs.

How it appears in contracts

Account control provisions appear in the Collateral and Security section of the factoring agreement. The factor may require a deposit account control agreement signed by the seller bank granting the factor the right to direct or block the seller account. DACA provisions are more common in larger programs or when the factor has concerns about payment routing. Under some DACAs, the factor does not exercise control unless an event of default occurs; under others, control is active from program inception. Sellers should confirm the scope of account control before signing, as it can affect banking relationships and operational flexibility.

Related terms

Related article: How invoice factoring works

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.