Riviera Finance March 6, 2014 No Comments

imageA common misconception is that non-recourse invoice factoring companies don’t really care about their clients’ credit.  The logic goes like this:

  1. The client’s customer is the one paying the bill.
  2. The factoring advance is given only after the product has been delivered.
  3. The client poses no risk, and therefore no credit issue.

The truth of the matter is that the non-recourse factor relies heavily on the client’s credibility.  As with any relationship, as time goes on, trust either builds or erodes.  The factor either gains confidence in the integrity of the client and the business transactions, or becomes increasingly skeptical.  In the context of factoring, clients manifest integrity in a variety of ways, such as:

  • accurate invoicing
  • accurate and complete order fulfillment
  • proper and organized backup paperwork
  • timely reporting of financial changes
  • reporting of underlying client issues

When the factor comes to fully trust the client’s integrity, it’s assumed that the face value of each “next transaction” presented for factoring can be relied on to reflect its actual value.  This is the key to a smooth factoring relationship, which in turn can mean higher advances, fewer delays, and an open path to maximum cash flow.

Learn more about non-recourse factoring here.