As its name implies, bad debt is a big no-no for a company. But how to shield your organization from this type of debt? Non-Recourse Factoring is one of the most effective tools available to business owners.
What Is Non-Recourse Factoring?
As you probably know already, Factoring means selling your unpaid invoices to a company called Factor which in turn takes care of the collection process in exchange for a small fee. The main advantage of Factoring is that it allows you to get cash without having to wait 30 to 90 days for your customers to pay you.
Now, there are two basic types of Factoring: Recourse and Non-Recourse.
With Recourse Factoring, you are responsible for any invoices the Factoring company is unable to collect from your clients.
By contrast, with Non-Recourse factoring, the Factoring company takes on the risk for any non-payment. Yes, you read that right: with Non-Recourse Factoring, the Factor absorbs de loss if your customer doesn’t pay.
Non-Recourse Factoring Protects You From Bad Debt
Not all debt is created equal. In some cases, organizations incur debt to obtain benefits down the line, like when a company takes out a business loan to expand its facilities or increase its capabilities. This is considered good debt because it stimulates growth and enhances the value of your organization.
Bad debt, on the other hand, is called like that because is a burden for a company. This is very often uncollectible debt that must be written off, negatively impacting a company’s cash flow and making a dent in its profits.
As a business owner, you should go out of your way to steer clear of bad debt, and Non-Recourse Factoring helps you do just that. When you choose a Non-Recourse Factoring company like ACS Factors you are shielding your organization from the effects of bad debt, while enjoying other benefits that include:
- Improve your cash flow. Factoring helps you fill gaps in your cash flow, ensuring that your company has the cash it needs to meet its goals.
- Get funds regardless of your credit history. Unlike other forms of financing, Factoring doesn’t require you to have a long credit history.
- Save time and resources. When you Factor your Invoices, the Factoring company takes care of the collecting process, allowing you to free up time that can be crucial to complete other, more strategic tasks.
ACS Factors: We Turn Your Invoices Into Immediate Cash
At ACS Factors, our mission is to help you get the capital you need to move your business forward regardless of your industry or the size of your organization.
We are located in Upland, California, and have many clients in the distribution and logistics corridor which includes Ontario, Riverside, Fontana, Jurupa Valley, and Moreno Valley.
Reach out today by email (firstname.lastname@example.org) telephone (909-946-5599), or through our social media accounts on Facebook, Twitter, and YouTube, and start converting your accounts receivable into cash today!