No matter what industry you’re in, your business is always in need of a little extra working capital. Whether you’re looking to grow into a new market, hire more employees, launch a new marketing campaign, or simply looking to pay off debts, it’s almost inevitable that your business will need to utilize financing.
How Non-Recourse Factoring Can Help Your Small Business Grow
As a startup business, you know that there are multiple forms of financing options—but which is the best for your needs? We’re here to outline some tips on how to use non-recourse invoice factoring.
1. You’re More Likely to Get Financing Through Factoring Over Bank Loans
As a startup, most likely, you are less likely to have strong enough credit to get an affordable business loan. Banks that administer business loans see startups as a risky investment and are less likely to give you what you need at a reasonable price.
One of the major benefits of non-recourse invoice factoring is that the factoring company won’t focus on your business’s credit or financial history. In order to grant you funds, the factoring company looks into the financial strength of your clients. Because the factoring company purchased your invoices, they look into the client that holds the invoice with your company, as they will be collecting money from that individual for your business.
This makes it more likely for you to get the financing your business needs in order to take the next step into bigger ventures.
2. You Won’t Need to Give Collateral
With non-recourse invoice factoring, there’s no need to use personal assets as collateral for financing. There are many forms of business financing that require you to put up personal assets, such as your home, vehicles, and more in order to receive funding.
With non-recourse invoice factoring, there’s never a need to present collateral for funding. A factoring company purchases your invoices to grant you 96% of its total in just 24 hours or less. This form of financing allows you to get access to the money that’s already owed to your business without any strings attached.
3. Avoid Incurring Additional Debt with Non-Recourse Invoice Factoring
One of the most common misconceptions about non-recourse invoice factoring is that it is a type of loan. With a loan, you are borrowing a sum of money with an attached interest and contract for repayment. With non-recourse factoring, you are simply getting access to the money already owed to your business.
What this means is that a factoring company is purchasing your invoices to advance you up to 96% of its total with low rates. With non-recourse invoice factoring, you’ll never incur additional debt to your business—you’re simply skipping the typical 30 to 60 day wait period between the completion of the job and payment for it.
4. Use Non-Recourse Invoice Factoring to Build Working Capital Without the Risk
With non-recourse invoice factoring, you’ll eliminate the typical 30 day wait period for payment for your work. Non-recourse factoring works as a type of monetary advance that allows you to have access to the money owed to your business faster.
This allows you to receive immediate payment for your work, giving you the ability to build a stronger, larger source of working capital. With a strong source of working capital, your business will have the ability to:
- Purchase new equipment
- Expand into new markets
- Hire more employees
- Upgrade systems, and much more
The biggest benefit of non-recourse factoring is that you are able to get financing without the risk. Because the invoice factoring company purchases your invoices, they take on 100% of the risk if your client neglects to pay or fails to complete payment on their invoices—keeping your credit and your capital safe.