FACTORING
RECEIVABLES
Factoring
receivables is the process of selling credit worthy accounts
receivable for immediate cash. This working capital
tool has been around for over 100 years and has recently
become a powerful way for small business to prosper and
compete with big business. As a small business grows
they are often forced to offer flexible selling terms to
their customers. This puts a strain on cash flow and
creates the need for receivables factoring. By factoring
invoices a business can offer flexible terms with the confidence
they will have cash for the sale within one day in most
cases.
Could
your business benefit from by factoring receivables?
RECOURSE
FACTORING
Recourse
factoring is now the most common type of factoring transaction
in the United States. This factoring transaction allows
the Factor to go back to the Seller to satisfy the invoice
if payment is not received (normally after a 90 day period).
The credit risk does not transfer to the Factor during the
recourse factoring process. Normally, in the event
of non-payment by the customer, the seller must buy back
the invoice with another invoice (credit worthy).
Recourse factoring of receivables is typically the lowest
cost for the seller because the risk for the Factor on the
funding transaction is lower. This factoring process
does not reduce credit risk, but it does provide additional
working capital.
Want
a quick factoring
quote? Please click
here to get a great factoring
rate.
Questions? Call us at 1 (877) 876 2803 now (toll free).
NON
RECOURSE FACTORING
Non
Recourse factoring of receivables puts the risk of non-payment
fully on the Factor.
If the customer does not pay the invoice, it’s the
factors problem to deal with and they cannot seek payment
from the Seller (depending on exactly how the contract reads).
This often seems like a great way to go, but the Factor
will only purchase solid credit worthy invoices and often
turns away average credit quality customers. The cost
is typically higher with this factoring receivables process
as the Factor assumes greater risk.
WHAT'S
THE BEST RECEIVABLES FACTORING SOLUTION
This
will depend on how you feel about your customers.
If your customers are able to pay the invoices on a regular
basis then recourse receivables factoring will provide the
lower factoring expense.
Non recourse factoring may be better if the elimination
of all risk is more important to you then the higher receivables
factoring fee structure. Some business owners prefer
the piece of mind it brings and are willing to accept a
higher factoring expense. With either option the business
increases available working capital by factoring receivables.
We welcome the opportunity to learn more about your business
and help you determine if factoring receivables can provide
a solution for your cash flow needs.
Get
a factoring receivables quote now
To
speak with one of our representatives about factoring
receivables call us now at 877-876-2803
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