Non-Recourse Factoring Helps Credit Score | Business Factors
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How Non-Recourse Factoring Can Improve Your Credit Score

good credit score with non-recourse factoringYou’ve done everything right for your business. You pay off your business’s debts, complete orders on time, but you still can’t get approved for a loan.

Because you are the business owner, you have a high debt-to-income ratio, that keeps you from getting financing. If this is the case for your business, look to non-recourse factoring. This type of alternative funding helps businesses access the funds they need, quickly, and with minimum credit requirements.

Non-recourse factoring is not a type of loan. You partner with a business factoring company to factor your receivables and invoices to start building credibility with vendors, employers and  contract workers, and improve your business’s credit rating – and with no credit risk to your business. Here’s how non-recourse factoring works.

Flawless Payment History

With many businesses, owners are constantly waiting on invoices to be paid. Business owners can’t pay their bills until these payments come in. No matter how many email reminders you send, your clients still seem to be late on their payments – which is killing your credit.

With non-recourse factoring, a business factoring company advances you up to 95% of your invoice with low rates to help you get payments faster. This process takes no more than 24 hours, where you can wait up to 90 days to get a loan from a bank.

By using factoring, you will be able to secure a strong source of capital to ensure that you make every payment on time.

Improve Credibility

When you consistently pay your bills on time, not only does it improve your credit, but also your credibility with vendors and contractors. Vendors and contractors look to partner with businesses with this reputation. Without consistent, on time payments, they will be less likely to work with you.

When you use factoring for your invoices, your cash flow goes from unpredictable to stable, practically overnight. With this, you will always have a strong source of income to fall back on to make payments on time, every time.

Access Working Capital Without Incurring Additional Debt

With non-recourse, invoice factoring, you are able to access working capital for your business sooner, without incurring any debt, or negatively impacting your credit score. If you were to take out a small business loan, or any type of loan, the debt will impact your credit score, as well as your debt-to-income ratio, which makes it harder to get approved for a loan in the future.

With loans, you are penalized every time you are late on payments, which can be detrimental to your credit score. One of the most common reasons that our clients default on payments is due to pending invoices. Rather than leaving this in the hand of your clients, you can now take control of your business’s finances using factoring.

By utilizing the benefits of non-recourse factoring, you will be able to build a solid source of capital to build strong credit and credibility with vendors that will make it easier than ever to grow your business.

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About the Author:

author image Since 1991 I specialize in Invoice Factoring, PO financing and ABL facilities. I currently work internationally with companies in the US and Canada via our internet marketing division. Specialties: Accounts Receivable Factoring and Payroll Funding for Manufacturing, Oil & Gas, Telecommunications, Wholesale Trade Distribution, Staffing and Transportation. I always enjoy helping companies rise to the next level of success.

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