Businesses in all different industries are being affected by the ongoing shut-downs. Not only has business slowed for many, but customers are taking longer to pay. Whether you are a factoring veteran or you are new to invoice factoring, you’ve discovered how it can solve your cash flow issues.
However, an advance on your receivables will only benefit your cash flow and overall business if you get to keep that cash. Unless you are using non-recourse factoring, you are at risk of having to pay the advance back to the factoring company should your customer have financial issues and not pay. Increasingly late payments are one sign of a possible impending bankruptcy.
Value of Non-Recourse Factoring
Evaluating Customers Ability to Pay
With much uncertainty, it can be tough to determine which of your customers, new and existing, are financially sound in this market and able to pay their bills. Unless you are a business credit expert, it may prove to be too risky, evaluating on your own. Non-recourse factoring can be considered cash flow with credit insurance, a great value, especially during times like these!
There are some important benefits to having a non-recourse factoring arrangement when you factor your invoices.
- You collect up to 95% of invoice value upfront.
- You are protected against bad debt.
- The factoring company becomes your back-office so you no longer need to worry about invoicing and collections
- Factoring companies purchase your invoices rather than loaning you money. For this reason, factoring doesn’t impact your credit or involve taking on debt.
- You can enjoy more steady cash flow for your business which can be used to meet payroll, invest in new equipment, buy more stock or anything you need to run your business.
What Types of Businesses Benefit from Factoring Without Recourse?
Any business invoicing other businesses for goods or services that have to wait 15-60 days for payment would benefit from factoring. Factoring without recourse can help many businesses grow and improve their financial situation. In addition to businesses impacted by COVID-19, you may want to consider non-recourse factoring if you fit into any of the following categories.
- You can’t afford for your customers not to pay their invoices
- You are a startup with an existing list of customers
- You are looking for financing but don’t want to take out additional loans.
- You’ve been turned down for traditional financing because you haven’t been in business long enough, you don’t have sufficient collateral or you don’t have strong business credit.
- Your business has seasonal fluctuations. For example, most of your business is in the summer or during the winter holidays. Factoring can help you get through the peaks and valleys.
- You have any type of business with commercial accounts receivable.
If you want to enjoy the benefits of invoice factoring, you can get started in a few simple steps. You’ll need to fill out a simple application and supply some information such as a list of customers, your most recent accounts receivable, and a sample invoice.
Riviera Finance has been evaluating business credit while providing businesses with cash flow and payment assurance for over 50 years. As one of the leading and most experienced companies offering non-recourse factoring, Riviera wants to work with you.