As a trusted factoring company working with businesses across the Southeast, we take great pride in the fact that we can offer financing options to growing companies that have been deemed “unbankable” for one reason or another. We specialize in custom financial solutions that help companies solve cash flow problems and create the working capital they need to achieve both short- and long-term goals. One of the most popular financial solutions at our company is factoring. Keep reading to learn more about the benefits and styles of factoring, or contact The Commercial Group in Atlanta today to speak with one of our factoring experts.
Factoring Gives Growing Companies Financing Options
There’s nothing more depressing as an entrepreneur than to be experiencing rapid growth and not have access to the working capital you need to expand your business. Perhaps you need to buy new equipment, bring on new employees, or simply expand your operations into another region. If your money is tied up because your own customers and clients are slow to pay their invoices, it could leave you feeling helpless. The Commercial Finance Group doesn’t think that any growing company should be limited by things they can’t control. That’s why we offer factoring as a way to free up money that might otherwise be inaccessible for an indefinite period of time.
Multiple Styles Of Factoring
Although you may have heard about factoring from a fellow entrepreneur who used it to solve their cash flow problems or from the informational pages on this site, you may not realized that there are two different styles of factoring. Let’s take a look at them now:
Recourse Factoring
This is the most common style of financing offered by factoring companies. “Recourse” is the term used to describe an agreement that is made between you and the factor. It means that if your factoring company is unable to collect some of the invoices you’re owed, your business must buy them back. In most cases, this is an agreeable arrangement that minimizes risk for both companies involved. The client knows that they have a good chance of getting an advance on most of their unpaid invoices, freeing up much-needed cash, while the factor knows that they won’t lose money if and when a very stubborn customer refuses to pay.
Non-Recourse Factoring
This is a less common style of financing offered by factoring companies. As you may imagine, “non-recourse” means that the factoring company is willing to accept more of the risk in the event that unpaid invoices cannot be collected.
You might be thinking that non-recourse factoring sounds like a much better option, but there are a few caveats of which you should be aware.
- Not all factoring companies take non-recourse accounts
- Even those that do perform non-recourse factoring typically do so with several conditions your company must meet
- Non-recourse factoring is more expensive that recourse factoring
- Non-recourse factoring is typically reserved for companies with clients who are most likely to pay
- Paying the price for non-recourse factoring doesn’t necessarily mean you’re 100% protected in the event that your debtors don’t pay
Regardless of the type of financing you choose, most factoring companies go above and beyond to collect invoices. It’s in their best interest as well as yours to find a way to collect 100 of the debts as taking recourse is a time-consuming process
Commercial Finance Group Is Your Factoring Expert In Atlanta
Whether your company should choose recourse or non-recourse factoring depends on many options, and we encourage you to contact The Commercial Finance Group so we can discuss the finer points of your situation in greater detail. The difference between recourse and non-recourse factoring finance can have a big impact on the future of your company and is just one example of why it’s so important to work with a factoring company that you can trust.
When you sit down with a potential factor, you should have ample time to ask any and all questions that you have. You should also have ample time to review the terms of your potential contract to ensure that you understand all of the stipulations that are being placed on your company should you choose to proceed.
