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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08/25/15 – Paragon Financial Group to Hold Non-Recourse Factoring Education & Training Webinar

Posted by on August 25, 2015 in | 0 comments

FT. LAUDERDALE, FL–(Marketwired – August 25, 2015) – Paragon Financial Group will be holding a non-recourse Factoring education & training webinar on Friday, August 28, 2015 from 11:00 am to 12:30 pm EST for those interested in becoming or furthering their knowledge as a Factoring Broker or Financial Intermediary. Paragon holds webinars once per quarter providing further education and tools for its successful factoring broker program. Topics covered include: Using Non-Recourse Invoice Factoring as a Selling Tool Targeting the Non-Bankable Company Can Merchant Cash Advance (MCA) Companies and Factoring Companies Work Together? How to Generate Leads Online To sign up and for more information, please visit https://www.paragonfinancial.net/financial-intermediary-school-broker-education-training. About Paragon Financial Group For over two decades, US companies across all industries have selected Paragon Financial to meet their working capital needs. Non-Recourse Accounts Receivable Facilities are available to $3,000,000 USD. From government contractors to distribution companies, from staffing firms to manufacturers; business owners have successfully grown their companies with Paragon Financial’s Non-Bank Invoice Factoring, Accounts Receivable Management, Credit Protection and Purchase Order Financing Programs. For fast funding now, please call 888-271-9347 ext 1 or visit our website...

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Factoring Client Login – CADENCE ClientWeb

Posted by on August 6, 2015 in | 0 comments

Client Factoring Login 23 YEARS OF EXCEPTIONAL CUSTOMER SERVICE 888-400-5931 (Toll-Free) Chat Now Contact Form Hours of operation 8am—5pm EST Monday-Friday Bank Holidays Money When Your Business Needs It Most!™ For over two decades, US companies across all industries have selected Paragon Financial to meet their working capital needs. Non-Recourse Accounts Receivable Facilities are available to $3,000,000 USD. From government contractors to distribution companies, from staffing firms to manufacturers; business owners have successfully grown their companies with Paragon Financial’s Non-Bank Invoice Factoring, Accounts Receivable Management, Credit Protection, and Purchase Order Financing...

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Non Recourse Factoring

Posted by on July 15, 2015 in Accounts Receivable Financing, Blog, Non Recourse Invoice Factoring | Comments Off on Non Recourse Factoring

What is Non Recourse Invoice Factoring? Do different factoring companies have different definitions of the Invoice Factoring of Receivables Without Recourse? What is Recourse vs Non Recourse Factoring? And most importantly, how do I protect myself and my company from the “Nuclear Option”? Statistics show that less than 20% of Accounts Receivable Financing Companies utilize credit insurance as part of their Non-Recourse Invoice Factoring product. Why is that number so low? First, you have to have a strong balance sheet and credit culture to qualify as the large insurers who offer credit insurance have very strict guidelines. Paragon passes both hurdles with flying colors. Secondly, it is not an inexpensive investment. However, Paragon being entrepreneurial just like our clients feels it is the right thing to do when offering receivable factoring. Why do we feel strongly about utilizing credit insurance and passing on the benefit to our clients in the form of Credit Protection? In business there is only one thing worse than no sales and that’s selling it and not getting paid. Let’s answer the important questions about credit protection and non recourse factoring. Key Factors to Consider about Credit Protection via Non Recourse Invoice Factoring: What is the Factoring Company’s definition of Non Recourse? At Paragon we become your defacto credit department (we like to brag you get a free Credit Manager with Paragon). Each one of your customer’s will have a pre-determined credit limit: $20,000-$1,000,000 for example. What we advance you plus the factoring fees will be covered for bankruptcy protection via our policy. We will always pre-approve your customers before we fund your invoices.  Your salespeople will have a preapproved list on who to solicit for new sales. No wasting time on potential clients who don’t pay their bills. In addition, as your clients make payments on a regular basis with great credit history we can raise their credit protected limits. Your advance rate is also helped with nonrecourse factoring. What isn’t Covered under Non Recourse Factoring? At Paragon, our product gives you Working Capital, Credit Protection and AR management. You are in charge of keeping your customer happy. A big part of Accounts Receivable Management is confirming that your customer is satisfied with your service and product. Just like you, we want your customer’s quality, quantity and timeliness needs met. Of course that is your job. Hopefully our services will let you concentrate on meeting your customer’s needs since we have alleviated your credit and working capital issues. What if My Customer just doesn’t Pay Me? This is a question we hear from time to time and the million dollar answer is… Why? Creditworthy customers who have a history of paying their bills on time typically don’t turn bad overnight.  Something is going on. Improper paperwork? High return rate? Staff turnover? Fortunately Days Sales Outstanding (DSO) typically goes down for our new clients as the AR Management and Invoice Verification process reduces errors and speeds up the Accounts Payable Department steps. What if My Customers just Pay Slow? That is a great question and the answer is… We are OK with Slow Paying Customers as long as they pay within 75 days  (and we understand some industries like Oil & Gas can take longer) and we can get credit insurance on them. Again, it is all about protecting your business (and ours). What is the “Nuclear Option”? Your largest (or only) customer goes bankrupt… Paragon like you wants to live to fight another day. Sports Authority, A&P, Kodak, General Motors, Radio Shack, Linens n Things, Circuit City, Blockbuster, Adelphia; the list of huge, once healthy companies...

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