Non-Recourse Factoring Companies

Non-Recourse Factoring Company Options


 

Non-recourse factoring companies are designed to help your company get its cash flow going and free up your time from collecting unpaid bills. They take on all the risks of unpaid debt as soon as they reach an agreement with your company to handle the invoices.

What are the Differences in Non-Recourse Factoring and Recourse Factoring?

Recourse factoring is the process in which your business reaches an agreement with a factoring company for your unpaid invoices. Your payment is based on the face value of the invoices and the due date of the invoices. Your agreement with the non-recourse factoring company indicates that if an invoice is not collected after a specific time frame it will come back on you, thus your company will buy back the invoice and be responsible for further collections in order to make money from the customer.


Non-recourse factoring companies also involves transferring unpaid invoices to a factoring company for a specified payment amount based on the face value and due date of the invoices. However, if a customer doesn’t pay, it doesn’t come back on you. The loss of unpaid invoices falls back to the factoring invoice company. Therefore, your company may not get as much of the face value for the unpaid invoices, but it does not have to worry about uncollected invoices or unpaid debt.

Why Choose Non-Recourse Factoring Companies?

Non-recourse factoring is more popular among many more specific industries, such as transportation or medical operations in which you cannot be certain about the reliability of your debtors. If there is a risk that a large percentage of the invoices could be paid late or may not even be paid at all, non-recourse invoice factoring may be the best solution for the situation.

How Does Factoring Work?

The factoring company takes over responsibility for your unpaid accounts payable. Therefore, they are transferred your customer invoices. You are not paid full face value of your invoices because the factoring invoice company has to make a profit as well. Therefore, in general, companies are paid anywhere from 75 percent to 85 percent of the face value of the invoices. That amount is based on the risks of the accounts.

Invoice factoring could be considered an expensive form of financing a business, such as getting a loan which has a specified interest rate. In invoice factoring, your invoices or accounts receivable are the collateral needed by the financier.Non-Recourse Factoring Companies

Working with a reliable, well established factoring company is essential because the factoring company will be working directly with your customers. You want to ensure your customers will be treated professionally and friendly, so you will retain them as customers. You would want to know at what point the factoring company will pursue aggressive collections and what actions will be taken at what level.

Your business operations don’t have to be running short of cash. You have regular expenses that have to be paid, including payroll, utilities, the purchase of inventory. Those bills can be paid and your operations won’t be delayed. Invoice factoring can be a positive thing for your business, its growth, and your customers. If you are interested in learning more, contact a non-recourse factoring company for further details today.

Following a short application and approval process, the invoices can be transferred and funds can be deposited into your account within a week for the first transaction. Following transactions can be processed as quickly as a day, depending upon your operation and its size.  Either way Non-recourse factoring companies are a good fit for some.