What is Invoice Factoring without Recourse?

Posted by on March 14, 2017 in Non Recourse Invoice Factoring | Comments Off on What is Invoice Factoring without Recourse?

What Is a Non-Recourse Factoring Agreement? Thinking about invoice factoring without recourse for urgent cash flow or for working capital to grow your small business? Well, it may seem like there are a lot of factoring options out there for small business. Yet, all accounts receivable factoring options are not equal. Likewise, factoring companies (also known as, “factors”) are not all the same. Many factoring companies only offer factoring “with recourse.” More experienced and long-standing factoring companies offer factoring “without recourse.”  Invoice factoring without recourse or non-recourse factoring is an agreement within a factoring contract where the factors client does not have to pay back the factoring company if an invoice is not specifically paid due to bankruptcy of the client’s customer (the Account Debtor) under an invoice with credit protection in place. With a recourse arrangement, when purchased accounts are not collected by the factor for any reason within a relatively short time, the factor has recourse to charge back to the client the net value of an unpaid invoice. When your company enters into a non-recourse factoring agreement however, your business is protected against extreme situations that prevent your customers from paying an invoice. Whether a factor offers your company invoice factoring with recourse depends on: your factor provides a credit protection program to offset when your customers are unable to pay an invoice due to an unlikely and extreme event, such as, bankruptcy, you choose an established factor that is able to spread its risk among many of its clients, the credit-worthiness of your customers, and your company’s successful application for factoring financing. A typical non-recourse factoring agreement offers the following basic features: Your factor purchases your accounts receivable by paying an advance to your company for up to 90% of the value of each invoice included in your factoring agreement. Your factor then promises to pay your company the difference due for the invoice (once your customer pays the factor for the full value of the invoice) minus factoring fees. The difference due paid by your factor minus the factoring fees, is paid in a timely fashion to your company as each invoice is paid in full by your customer and according to terms in your factoring agreement including non-recourse assurances. How Does AR Factoring Without Recourse Help Your Small Business? First of all, factoring is the purchase of a company’s accounts receivable as opposed to a loan that creates debt on your business balance sheet. You speed up your cash flow by leveraging, or selling-off, the accounts receivable assets your company already has on its books. Factoring focuses on the creditworthiness of your customers, while bank loan departments would focus on your company’s financial history and cash flow. Accounts receivable funding is not a loan. So, your company ends up with less balance sheet debt. A well-established factor providing AR factoring without recourse helps your small business by: providing a master credit policy against the unlikely instance of your customer’s (the “account debtor”) bankruptcy, outsourcing the responsibilities and operational costs of receivables collections and credit assessment, and not only outsourcing your credit department to the factor, but also outsourcing the risk of accounts receivable! Which Businesses Benefit from Invoice Factoring Without Recourse? Many different lines of business benefit from invoice factoring, sometimes also referred to as discount factoring. Some people refer to invoice factoring as discount factoring when the factor purchasing an invoice from its client charges a factoring fee, and then the client thinks of the factoring fee as an amount discounted against the full value of the invoice otherwise to be paid by the client’s...

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How to Choose a Factoring Company

Posted by on July 5, 2016 in | Comments Off on How to Choose a Factoring Company

While factoring receivables is a smart way for a business to raise money, it can also turn into a nightmare if a company chooses the wrong factoring company. Beware of dangling carrots; a bad factoring company can cost a small business money, important client relationships, and create instability. When a business is desperate for working capital fast, it’s even more essential they make the proper decision in choosing the right factoring company. How Long Has the Factoring Company Been in Business? One of the most important aspects of finding the right factoring company is the amount of time they have been in business. Experience and time spent in a small business specific industry is essential. The more they understand an industry, the smarter and more complex funding deals can be made. Excellent factoring services should have a strong balance sheet and be direct funders. They should be able to offer more sophisticated funding packages, better rates and lower your overall risks while improving the chances of success. What are the Terms and Rates/Fees of Factoring? Depending on the Factoring company this can be your only fee or this can be just the fee to cover the factor’s risk and overhead. Make sure to ask the factor when doing your research. This fee primarily covers all of the collections work including the processing of invoices and collection from your customers, the account debtors. It is typically charged based on the total value of the invoice amount you assign to the Factor. For many factoring providers, this fee also covers their cost of funds for invoice financing. Factoring rates are based on monthly, quarterly or seasonal sales volume or cycle. You will see many Factoring providers tout their no minimums policy. However, these are typically at a much higher rate in the factor’s term contracts. Again, it’s important to ask about the contract terms. Does the Factoring Company offer Non-Recourse Funding? Less than 20% of receivable factoring companies utilize credit insurance as part of their factoring package. The non-recourse factoring company must have a strong balance sheet and credit culture to qualify as the large insurers who offer credit insurance have very strict guidelines. Providing credit insurance is not an inexpensive investment. Non-recourse factoring greatly benefits you in lowering your risks of not getting paid. Do You Know the Difference Between Invoice Factoring, Invoice Financing, AR Factoring and others? The factoring industry has a complex variety of funding options. Many sound the same but can be very different. From accounts receivable financing to accounts receivable factoring to bill & hold to letter of credit, these terms can be quite confusing and at the same time essential for your success. Give our factoring glossary a visit to educate yourself on the many terms used in the factoring industry. Working with an experienced factor with an outstanding reputation helps small companies enhance their client relationships, gets the highest amount of cash in their pocket, fast and with ease. They will have upfront and clear fee structures and will not attempt to inundate businesses with hidden fees and charges. Experienced factors thrive and grow based on their reputation. Paragon offers you 23 years of factoring experience. Apply now with our secure application or to learn more, please contact our National Sales Manager, Chris Curtin via email or toll-free at 888-400-5931 ext 1. Money When Your Business Needs It...

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03/28/2014 – Factoring Company Paragon Financial Group Hires Carlos Rivera

Posted by on March 28, 2014 in | 0 comments

FOR IMMEDIATE RELEASE Ft. Lauderdale, FL – March 28, 2014: Paragon Financial Group, a leading provider of invoice factoring, credit protection and purchase order financing, has announced that Carlos Rivera has joined the firm as a Relationship Manager. Carlos will be responsible for client relations with a focus on the Spanish speaking business community. With 8 years of experience in the financial services sector, Carlos brings targeted expertise with a deep understanding of business funding. Along with the innate ability to connect with clients and understanding their business needs. “We are excited to welcome Carlos to the Paragon Financial team where he will fit right in with our famous soft touch,” said Michael Rossi, President of Paragon Financial. “We look forward to the impact he will make on the further growth of our business along with helping us to continue cultivating the Hispanic business community.” Most recently Carlos was a credit manager for a large factoring company in Atlanta overseeing a portfolio of over $6 million dollars. He has extensive experience working with International clients including Latin America, Canada, Japan, China and more. At this position he was also involved in supply chain finance and daily account management. Previously he help positions as a collections manager handling multiple tasks from being the point of contact for clients, agents to working with attorneys to ensure maximum recovery of accounts. ABOUT PARAGON FINANCIAL GROUP For 20 years, Paragon Financial Group has provided working capital solutions for growing companies throughout the U.S. They serve small to large-size companies across a wide variety of industries through accounts receivable, invoice factoring, and purchase order financing up to $3 million per month in volume. Paragon is a leading source for receivables financing, government contract financing, payroll funding, and purchase order financing. For more information, visit...

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09/12/2013 – Paragon Financial Group Seeing Federal Government Sequestration Slow Down Payments to their Government Contractor Clients

Posted by on September 11, 2013 in | 0 comments

FOR IMMEDIATE RELEASE Ft. Lauderdale, FL – September 12, 2013:  Paragon Financial Group, Inc. (“Paragon Financial”) is seeing the Federal Government sequester having a direct impact on their clients and prospects.    Nearly all of Paragon Financial’s government contractors are experiencing a slow-down in payments from the Federal Government increasing the need for receivable financing and purchase order factoring programs. “Even with companies winning contracts there is frequently a delay in receiving the cash from the contract,” said ML Mackey, CEO and co-founder, Beacon Interactive Systems in a Federal News Radio interview in the start of the 4th quarter 2013. “That means you have to stay in a holding pattern before you can actually start executing on work.  That’s a challenge for everyone across the industrial base, but it’s a disproportionate and really terrible challenge for small business, because we have much smaller pockets. We have much less ability to weather decreased cash flow, but also the planning for your team. You have to hold your team together if you’re going to effectively execute. We can’t just cut staff and then pick them back up again when the contract comes. The way a small business is extremely effective and innovative is by keeping their team in good operational condition. I’ve watched a lot of my colleagues either cutting employees or just closing their doors because they can’t wait it out, hoping they’ll be under contract by the end of the year.” These delays have had a direct impact on Paragon Financial’s small business contractors.  Paragon Financial has been able to help navigate their clients through the cash flow problems with their government contractor receivable financing and purchase order financing programs.   “Our clients in the government contractor segment are being squeezed financially because of longer pay times and increased competition on contracts resulting in working capital issues. We are also being approached by SME’s who now need receivable financing because of slower payments,” said Chris Curtin, National Sales Manager of Paragon Financial. ABOUT PARAGON FINANCIAL GROUP For almost 20 years, Paragon Financial Group has provided working capital solutions for growing companies throughout the U.S. They serve small to medium-size companies across a wide variety of industries through accounts receivable, invoice factoring and purchase order financing up to $3 million per month in sales volume. Paragon Financial is a leading source for receivables financing, government contract financing, payroll funding, and purchase order financing. For more information, visit...

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What To Look For In A Factoring Company

Posted by on July 28, 2011 in | Comments Off on What To Look For In A Factoring Company

In order for factoring to be successful, it is important for a seller to find and work with the right factoring company. What does the ‘right factor’ look like? Well, that depends on the particular company. Factoring companies will have different strengths, processes, services and weaknesses. A company looking to sell their accounts receivables will need to find the particular factoring company that best meets their needs. However, there are some common considerations that should be made. We will discuss some of them in this article. Factoring Fees: It is important for a company looking to sell their invoices to understand the exact fees that will be charged by the factor and under what conditions they might be raised or lowered. Companies should also ask about charges outside of the discount fees. Penalties: Under what conditions are penalties dolled out? This information is very important. The company selling their invoices will want to know what actions to avoid, less they be charged for penalties. This information should be in writing. Reporting: The seller will want to know about the reporting practices of all potential factors. How often will updates or notifications of collections be given and what exactly will those reports include? Service options: One thing that will separate factoring companies is what other value added services they are able to provide. Finding out exactly what these are and their costs is an important consideration when choosing a factor. Experience: In many cases, it is best to go with a factoring company that is established and in every instance, reputable. It is important to work with companies that have been in business at least 10 years and are recognized within the factoring industry. Choosing the right factoring company will largely determine the quality of your experience. If you pick the wrong one, like any funding source, the entire process can be extremely frustrating and may end up costing you big money in unforeseen fees and damaged customer relationships. On the other hand, if you are able to find and work with a top notch factor, you are likely to have a much more positive experience. When picking a factor, you will need to consider their experience (generally more is better), their service options, fees and penalty policies and reporting practices. Taking the time to learn as much as you can about a factor and performing your due diligence upfront can save your company both time and money. Ready to work with a factoring company with over 23 years of experience? Contact us today to discuss your funding options. Apply securely now, email us, chat live or call (888) 400-5931 ext 1. Money When Your Business Needs It...

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