If a business owner is looking for additional working capital, non-recourse factoring may be a viable solution. In non-recourse factoring, the factor buys a company’s invoices at approximately 96%, and they are responsible for collecting on those invoices. Once the invoice is paid, the customer receives the remainder minus the factoring fee. Below is a quick look at some of the biggest benefits about factoring.
Protection From Bad Debt
In non-recourse factoring, business owners are protected if a client doesn’t pay the invoice. Lessening liability is a big advantage for business owners, especially those who are just starting out and who aren’t yet on firm financial ground.
Improved Cash Flow
As most owners know, cash flow is a company’s lifeblood. It helps businesses operate smoothly, support workers, buy equipment and purchase inventory. If a business is in a slow period or if clients delay paying invoices, insufficient cash flow can put the company in jeopardy. Non-recourse factoring is a quick and simple process that gives businesses the money needed to operate smoothly.
With a factor, business owners don’t have to wait for clients to pay them. Rather than getting a loan and accruing debt, business owners can turn to a factor to get the money needed for expansion. Whether an owner wants to hire additional workers, move to a bigger building or buy expensive equipment, consistent financing can help them reach their growth goals.
If a company is in debt, non-recourse factoring can help the owner get the necessary funding. It can help companies continue operating while climbing out of debt.
In non-recourse factoring, the customer chooses which invoices to factor and when they’ll be factored. This is a significant benefit because every business has different financing requirements. Whether an owner wants to factor some or all of the company’s invoices, a non-recourse factor can help.
Non-recourse factoring is a relatively easy way for business owners to get the financing they need. Even if the company lacks good credit, it can still qualify because factoring is based on the client’s credit, not the business’. With factoring, business owners have a smooth, quick alternative to bank loans and other kinds of financing.