DSA Factors

What is Non-Recourse Factoring?

Non-Recourse Factoring is a form of factoring where you not only get an advance, but you also receive credit insurance on your receivables from your factoring company.

While one of the main benefits of factoring is receiving a cash advance on your invoices to improve your cash flow, with non-recourse factoring you receive the additional benefit of credit insurance. What that means is that your factoring company assumes the risk with the receivables you sell to them. It is important to work with a factoring company that offers non-recourse factoring. Factoring companies that only offer recourse factoring will require you to pay them back if one of your customers doesn't pay their bills.

There are a large number of reasons why a customer may not be able to pay their bills. The most obvious reasons are that they may go bankrupt or out-of-business. In these situations it can be very diffucult to get paid for your receivables, unless of course you have insurance on your receivables. Other situations where a customer may be unable to pay is when they are having cash flow problems. Often times cash flow problems may be a sign that a company will file for bankruptcy or go out-of-business. However, regardless of what they may do in the future, with non-recourse factoring your factoring company assumes the risk in these situations. Finally there is the situation where one of your customers is simply a deadbeat, they just refuse to pay for an invoice even though they can afford to do so. This is one more situation where you are covered with non-recourse factoring.

While there are credit insurance companies out there who provide credit insurance to cover you in these types of situations, typically they will only cover very large, extremely credit-worthy companies, plus they require that the invoice amount meets a minimum threshhold before they will insure it. With non-recourse factoring things work quite differently, not only can you get insurance on large retailers, distributors, and Fortune 500 companies, but you can also get insurance on local mom and pop stores and any other small business who is requesting payment terms. With non-recourse factoring you also aren't limited to only large orders for tens of thousands or hundreds of thousands of dollars, but you get credit insurance on smaller orders as well, even if they are less than a hundred dollars.

Of course non-recourse factoring isn't just credit insurance with a cash advance, you also can outsource your entire accounts receivable department with non-recourse factoring. Your factoring company will handle all of the credit checking and collection work for you. Best of all, since your factoring company is handling all of your accounts receivable for you, there aren't any rules that you need to follow in order to make a claim, you don't even have to make a claim since you've already been funded by your factoring company.

How Do I Qualify for
Non-Recourse Factoring?

Available to All Wholesalers

Non-recourse factoring is available to all wholesale clients

At DSA Factors we offer non-recourse factoring to all of our wholesale clients. Non-recourse factoring is available to both established companies and new startup businesses, as well as to both domestic and foreign businesses. If you are a manufacturer, importer, or distributor and have receivables, then you qualify for non-recourse factoring.

Based on Your Customers Good Credit

Credit approval is based on your customers' good credit

At DSA Factors we are extending a line of credit to your customers, so all approval decisions are based on your customers' good credit. With our database of over 60,000 businesses accross the US and Canada, along with access to several different credit agencies, we are proud to offer an approval rate of over 95% to our clients.

What is Covered Under Non-Recourse Factoring?

Non-recourse factoring covers customers with an inability to pay:

  • Customers who have declared bankruptcy
  • Customers who have gone out of business
  • Customers experiencing financial difficulties
  • Customers who are deadbeats

Non-recourse factoring does not insure customer satisfaction:

  • Disputes due to damaged merchandise
  • Disputes due to late shipments
  • Any agreed upon deductions such as damage allowances
  • When a customer short pays an invoice

While you are still responsible for customer satisfaction, at DSA Factors we know the difference between a customer who is unable or unwilling to pay for financial reasons, and customers who have a legitimate dispute. With over 30 years experience offering non-recourse factoring, you can rest assured that your receivables will be covered when one of your customers is unable to pay due to financial hardship.

Non-Recourse vs Recourse Factoring

Both non-recourse and recourse factoring provide you with improved cash flow, continuing credit checks, and outsourcing your accounts receivable. The main difference is that non-recourse factoring also offers you credit insurance, where recourse factoring does not.

Below is a quick look at how non-recourse factoring compares to recourse factoring.

Contact Us Today

DSA Factors - Money to Make Your Company Grow!

PO Box 577520
Chicago, IL 60657

 773-248-9000

 773-248-9005

 info@dsafactors.com

 

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