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Factoring Basics | What is Non-Recourse Factoring?

Invoice Factoring Strategizing NotebookIf you are like many business owners, you have most likely reached a point where you need financing. No matter if you are looking for financing to catch up with growth or to stay afloat, when you need financing, you need it fast.

Many business owners believe that the only way to get financial help is through a bank. This can leave many business owners high and dry. In today’s ever changing economy, banks have increased the requirements for businesses to get financing, leaving many small business owners discouraged and in debt.

Thankfully, there’s a solution. There are many forms of alternate financing that give small business owners or businesses with poor credit a better chance of getting the funds they need. One of the best alternative financing options out there is non-recourse invoice factoring.

Understanding Non-Recourse Invoice Factoring

Non-recourse invoice factoring is a type of risk free invoice factoring. With invoice factoring your business is simply selling its outstanding invoices to receive a cash advance. This is accomplished through a factoring company. Each factoring company offers a different percentage advance according to their specific requirements. Our invoice factoring company advances up to 96% of the total invoice amount in just 24 hours or less.

After your invoice has been factored, the invoice factoring company will take on the responsibility of collections. With regular invoice factoring, your business would be responsible for repayment in the case that your clients fail to complete collections with the invoice factoring  company. When you use non-recourse invoice factoring, you will not hold this risk. The invoice factoring company will take on the task of repayment on the amount factored in the case that your client fails to complete their invoice.

Why Non-Recourse Invoice Factoring is Beneficial to Businesses

Non-recourse factoring allows you to have the liberty to enjoy the benefits of fast financing through invoice factoring without the risk of debt. Businesses that use non-recourse factoring have the ability to get practically instant payment for their work, without having to take on any financial risk.

With this fast form of payment, businesses can experience the following benefits.

1. Increased Cash Flow

Without having to wait for your clients to pay off their invoices, you can get paid instantly for your work. Waiting 30 to 90 days for your clients to make payments on their invoices only hurts your cash flow. Using non-recourse invoice factoring, your business has the ability to increase and stabilize cash flow.

2. Ability to Build a Strong Source of Working Capital

As you are increasing and stabilizing your cash flow, you’ll also be able to build a strong source of working capital with non-recourse invoice factoring. With consistent, instant payment, your business will be able to secure more working capital—allowing for better, more efficient operations.

3. Keep Up with Fast Growth

When your business starts to take on more clients, you begin to spend more and more money to keep up with the demand. By utilizing the benefits of non-recourse invoice factoring, your business will be able to have the working capital to better manage an influx in business.

With non-recourse factoring, your business will never have to pass on a client due to insufficient funds. Your business will be able to take on more clients and grow larger than ever thought possible.

4. Pay Off Debts with Invoice Factoring

As many businesses do, taking on a small business loan in your early days of operation can end up haunting your finances for many years. Although that funding is necessary to start a business, it shouldn’t harm your overall credit in the future. Using non-recourse invoice factoring, you can secure the funds you need to make on time, full payments to lenders and banks to start paying off debts faster.

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About the Author:

Robert Bernfeld started in the commercial finance industry in 1974. His early years included positions with Aetna Business Credit and Foothill Group. During the next thirty five years. Mr. Bernfeld established both equipment leasing and accounts receivable factoring companies. He partnered in founding Business Facilitators, Inc. in 1999. Mr Bernfeld graduated from the University of California, Riverside in 1974 and received his Juris Doctorate from Loyola University School of Law in 1977.

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