Off Load Credit Risk to a Non-Recourse Factoring Company
Is your business struggling to pay its employees because of cash flow troubles? Over 30% of companies fail within two years because they lack working capital. Most entrepreneurs and small businesses do not understand their options to obtain credit risk A/R business financing.
Tight cash flow is incredibly stressful on business owners causing sleepless nights, but debtor protected accounts receivable (A/R) factoring can help your company.
Bankers Factoring provides customized non-recourse accounts receivable factoring solutions for clients in many industries and stages. Whether your firm is a startup, in rapid growth, or mature stages, we can provide a cash flow solution with credit protection.
We remove the burden of cash gaps through our non-recourse factoring solutions. We offer entrepreneurs and businesses premier solutions to finance their businesses. Running a business in any industry presents cash flow problems and issues when paying your employees or growing the company.
There are two fundamental types of factoring agreements: recourse and non-recourse. These types of factoring are distinguished by the assignment of liability for outstanding invoices or accounts receivables.
What is recourse factoring?
Recourse factoring is a factoring agreement where a client sells its invoice receivables with the acknowledgment that if the invoice defaults for any reason after the recourse period, the client is required to repurchase the invoice from the factoring company.
What is non-recourse factoring?
Non-recourse factoring is a type of factoring agreement where a company sells its accounts receivables to Bankers Factoring and we take the credit risk. If your customer does not pay its invoices, we absorb the loss. We take on the credit risk from the customer in the event of:
- Bankruptcy
- Insolvency
- Protracted Slow Pay
Suppose your company is exposed to external conditions causing high levels of volatility. In that case, non-recourse AR factoring can provide bad debt protection. We help business owners experience less stress, more cash flow, and improved business performance.
For example, if your business resales goods to a distributor and their end-user seized operations your unpaid invoices would be covered with our credit or bad debt protection.
Visit our previous article to learn more about non-recourse factoring.
Benefits of Non-Recourse Invoice Factoring
When you sell your invoices or accounts receivables to Bankers Factoring, we provide your company with protected cash flow. You receive your payments in two installments.
We cash advance up to 92% of your total invoice value upon purchase. We issue the second payment (rebate) where the remaining balance less our fees are paid. The final payment occurs when our client’s customer pays Bankers Factoring.
Without or non-recourse AR factoring provides credit protection through Bankers Factoring taking on the A/R risk. For example, when your company sells its invoices to Bankers Factoring, you do not need to worry about if your customer fails to pay. Our clients no longer stress paying their bills and focus on their operational performance and quality.
Benefits of Bankers Factoring Non-Recourse A/R Funding
- No hidden fees
- Same Day funding upon approval
- Credit protection for non-payment from your customer is covered
- Unlimited access to capital
- Outsourced A/R management
- We carry the bad debt for unpaid invoices
- Risk reduction
- Immediate cash flow solutions
Non-recourse factoring is suitable if you have commercial clients, rapid growth in your business, or extreme volatility. Image going from a struggling small business to a growing company with a strong outlook.
Requirements for non-recourse factoring
If your business is experiencing distressed financial times, we understand the importance of immediate cash flow. Companies conducting business-to-business or business-to-government work can obtain working capital. The main requirement is to complete and deliver the work to the customer with a verifiable invoice.
Without recourse (non-recourse), factoring requires our clients to adhere strictly to their vendor agreements with their customers (account debtor). The performance and quality of the products and services are the responsibility of our client.
For example:
- Insurance requirements
- Training
- Compliance with vendor code of conduct
- Business practices and policies
- Intellectual property
- Service Level Agreements
- Warranty
Running your business comes with a lot of uncertainty and challenges; we are here to eliminate the burden of chasing down your cash and losing customers. We understand you have customers and new opportunities in the marketplace. Let us provide cash flow solutions and eliminate the task of A/R management.
Non-Recourse Factoring Rates
Bankers Factoring offers tiered AR factoring pricing for startups as they grow. Instead of charging a flat fee for accounts receivable factoring, we provide incentives for growth. You pay based on the days sales outstanding (DSO) with our variable rates.
As your business grows, the factoring rates for your company will go down. That is the benefit of our tiered pricing model. A small business can exponentially expand its market share with access to A/R factoring lines.
The factoring rate is the percentage used to calculate a client’s cost to factor their invoices. This rate is usually calculated on the gross value of an invoice over a specified period (the recourse period). We assess many factors, including:
- Risk
- Volume
- Time
- Advance Rate
How do risk and volume affect your factoring rate?
The two most important criteria used to determine the rate are the risks associated with buying your invoices and the volume of invoices to be factored.
For an invoice factoring quote, we will consider:
- Your company’s industry and type of business: Some industries and companies tend to be more or less risky than others.
- The creditworthiness of your customer base: The more creditworthy your customers, the lower the risk of not getting paid.
- The volume and value of invoices to be factored: the more invoices you factor, the more access to working capital we can provide.
- The payment terms of each invoice
- The initial cash advance we issue
Visit our previous article to learn more about accounts receivable factoring rates.
Your company is rapidly growing but lacks the resources to deliver for your customers. Our non-recourse A/R factoring can remove the worry of keeping your business open. Our credit protection enables business owners to focus on the performance and quality of their operations without the nuclear risk of a big customer going bad.