Benefits of Non-Recourse FactoringBenefits of Non-Recourse Factoring

Non Recourse Factoring: Is it the right move for your business?

Invoice Financing: What does it mean for you?

Invoice financing or factoring is when a trade finance company buys your current invoices for up to 90% of their face value and assumes responsibility for collecting them. After the invoices are settled, you receive the remaining balance minus a small charge from the finance company.

To Recourse, or Non-Recourse?

For many businesses, particularly SMEs, entering foreign markets could present many new opportunities. Unfortunately, the non-payment risks often deter companies from expanding to markets abroad.
Invoice financing, also known as factoring, includes recourse and non-recourse factoring. The difference lies in who assumes responsibility for non-payment risks. Recourse factoring is when the seller assumes liability for the risk of unpaid invoices. On the other hand, with non-recourse factoring, it is the finance company that assumes this risk.

As a trade finance instrument, non-recourse factoring can protect the seller against buyers who do not pay invoices on time. It offers more favorable conditions to the seller, who doesn't risk financial ruin in the worst-case scenario.

Non-recourse factoring allows sellers and buyers to purchase open accounts without a bank guarantee, establishing an atmosphere in which both sides benefit. Let's take a deeper dive to explore and understand the perks of non-recourse factoring.

  1. Grow Your Business

Waiting for your clients to pay you becomes an issue of the past with non-recourse factoring. Whether you need to recruit additional personnel, relocate to a new site, or purchase equipment, having a constant cash flow can assist you in meeting your expansion objectives.

  1. Improve Billing Flexibility

Non-recourse factoring has flexible repayment terms of 30, 60, or 90 days, creating more favorable purchasing conditions for buyers. Every firm has varied financial requirements, and some prefer to factor more frequently than others. Non-recourse factoring allows you to pick which invoices to factor and when.

  1. Increase Cash Flow

As you know, cash flow is the backbone of any business and is crucial to supporting your employees, acquiring equipment, and much more. If you are trapped in periods of slow business or your clients take too long to pay invoices, your cash flow can dry up, jeopardizing your business. Non-recourse factoring is one of the most effective methods to ensure payments are on time. Because factoring is a quick and straightforward procedure you can have the money you need to keep your business going successfully.

  1. Credit Risk Protection

Non-recourse factoring helps eliminate credit risks from your organization since it protects you against non-paying buyers. This aspect of invoice financing is a significant benefit, especially if your company lacks the money to withstand the loss.

  1. Go Digital and Paperless

Digital trade finance companies allow your business to eliminate a substantial amount of paperwork. Sellers can upload invoices via a secure platform that optimizes transparency for both buyers and sellers. Other benefits of digital processes are faster responses and accelerated payments.

  1. Easy To Apply

Non-recourse factoring is a simple approach to financing. Even if your company does not have strong credit, you can still qualify since the factoring company will look at your buyer's credit, not yours. Another advantage of non-recourse factoring is that it's easier and faster than obtaining a bank loan or most other sorts of funding.

Get Financing From MODIFI

Seller Finance offers flexible and affordable solutions for growing businesses. We cover your buyers' credit risk and pay invoices immediately following the shipment of goods.

Contact MODIFI to learn more about Non-Recourse Factoring.



Unlock potential with MODIFI

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