Non-Recourse Factoring
Non-Recourse Factoring: What Are The Options?
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Non-Recourse Factoring is where the factor bears all the burden and responsibility of recovering the unpaid invoice is it turns into a difficult amount of money to collect or becomes a bad debt. In a sense, non-recourse factoring is simply a terms which is more explicit than factoring (as factoring usually implies that the factor collects the money in any case).
However, this does create the concept of recourse factoring, which is where the factor does not collect the money should it turn into a debt (they will collect the money from you if an invoice remains unpaid). The reason for the difference is that recourse factoring is at a lower cost (as you still take the risk of the bad debt) and is also easier to obtain.
Non-recourse factoring assumes that the factor will shoulder the burden for all bad debts. So if a customer does not pay the invoice you don't have to pay back the sum advanced by the factoring company. For this reason it attracts higher fees.
If you know which customers are likely to pay on time and which are not you will be much better armed at deciding which type of factoring to make use of, as well as saving your business some money at the same time.
If you'd like to know more about non-recourse factoring then make an appointment for a free no-obligation chat. All details are held in the strictest confidence. You'll be glad you did!
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