How Does Non-Recourse Invoice Factoring Work?
Many businesses don’t understand non-recourse factoring. If you are looking for the best financial solution for your business then you’ve come to the right place. Non-recourse factoring is when a factoring company purchases your current invoices at up to 96 percent. They will then be responsible for collection of the invoice. Once the client pays the invoice back, you will receive the remaining sum, minus a factoring fee. This type of factoring is also popular because it is known to protect you from clients who do not pay the invoice back (most of the time due to a credit reason). However, factoring companies differ, so you will want to speak with them about what their non-recourse factoring includes. Today, we’re going to take a look at several benefits of non-recourse factoring.
1.High level of bad debt protection with non-recourse factoring
Because non-recourse factoring protects businesses against the client not paying the invoice back, it is the best way to remove liability from your business. This is a huge advantage, especially if your business isn’t financially sound or has the funds to be able to handle that burden.
2. Improve your cash flow with invoice factoring
As you know, your cash flow is the lifeblood of your company. It is what you need to operate smoothly, support your staff, purchase equipment, and much more. If you get stuck in periods where business is slower or your clients take too long to pay invoices back, cash flow can become dry and this could put your business in jeopardy. One of the best ways to get paid on time is through invoice factoring, also known as non-recourse factoring. Because it’s such a quick and easy process to factor, you can have the money you need to keep your business running smoothly.
3. Help your company grow with non-recourse invoice factoring
With factoring, you no longer have to wait on your clients to pay you back the money you need. Rather than putting yourself in debt with a loan, invoice factoring is a much better solution to helping your company expand. Whether you need to hire more employees, move to a new location, or otherwise, having a consistent cash flow will help you reach your goals for growth.
4. Eliminate debt with non-recourse factoring
If your company is in debt, non-recourse factoring is a fantastic option, as you can receive the money you need without going into debt. This will not only help you continue business as usual, but will also help you work your way out of debt.
5. Flexibility with non-recourse invoice factoring
With non-recourse factoring, you get to choose which invoices you want to factor and when you want to factor them. This is a huge advantage to you, as each business has different financial needs. Some may want to factor more often than others. Whether you want to factor all your invoices or just a few, factoring caters to you.
6. Relatively easy to obtain
Non-recourse factoring is a much easier way to obtain the finances you need. Even if your company doesn’t have good credit, you can still qualify since it’s your client’s credit that they factoring company will be looking at, not your company’s.
Another benefit of account receivable financing is that it is an easy type of financing. It’s a much quicker and smoother process than getting a bank loan or other types of financing.