How Non-Recourse Factoring Can Improve Your Credit

Credit Score Report for an Invoice Factoring CompanyAs a small business owner, secure a strong source of working capital can be very hard to accomplish on your own. For small businesses, you are constantly waiting in invoices to be paid and processed. If just one of those invoices is late, or completely neglected by a client, your cash flow can suffer tremendously.

With invoices, your business is always in limbo when it comes to payment. When they lag or fail to complete payment of their invoices, it kills your business’s credit. With just a few failed invoices, your credit can be completely damaged. Thankfully, there’s a solution.

Using Non-Recourse Invoice Factoring To Build Your Credit

When you use non-recourse invoice factoring, your business can get access to its capital—fast.  A non-recourse invoice factoring company will step in and purchase your outstanding invoices. The invoice factoring company will then advance your business 96% of the total amount of your invoice with low rates. With non-recourse invoice factoring, the factoring company will take 100% of the responsibility of repayment of the amount advanced if your client fails or neglects to make payment.

Non-Recourse Invoice Factoring vs. Bank Loans

This is a major benefit to your business. Non-recourse invoice factoring allows you to get instant access to the money owed to your business—without the risk. When you get financing through a bank, your business is borrowing money. When you borrow money, your business is taking on debt. It will need to be repaid over a series of monthly payments—typically with high interest rates.

When you use non-recourse invoice factoring, your business is simply getting a cash advance for the funds that are already owed to it. With non-recourse invoice factoring, you’ll get the funds you need—no more, no less.

Credit Checks

With non-recourse invoice factoring, your business will not have to endure any credit checks. The invoice factoring company will only check the creditworthiness of your clients, not your business. This is a major benefit to your small business. Many small businesses don’t have strong enough credit to get a business loan from a bank. A bank has certain requirements of how much they can lend to a business with a specific credit score. With poor credit scores, a small business will be less likely to get approved for a bank loan. If your business does happen to get approved, it will most likely end up paying high interest or fees on the amount borrowed.

With non-recourse invoice factoring, this is not the case. Because they only look into the creditworthiness of your clients, you will be more likely to get approved for your financial needs. The factoring company looks into your customer’s creditworthiness to ensure that they will receive payment after they have purchased the invoice.

Using non-recourse invoice factoring, your business will have instant access to the money owed to it, without having to incur any additional debt to your name. This will allow your small business to get the funds it needs to pay off current debts and increase your credit score. With a strong source of working capital and solid credit, your business will be able to grow larger than ever before.

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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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