Non-Recourse Factoring

The Challenges of Inconsistent Cashflow

Understanding Non-Recourse Factoring

What is non-recourse factoring? In the factoring industry, it means unlocking working capital without taking on the risk of debt or loans by selling your invoices to a non-recourse factoring company. After that, the factor takes care of the collection process.
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For businesses considering non-recourse factoring, it's crucial to understand that while this option minimizes credit risk, there are liabilities involved such as customer solvency exclusions and higher fees compared to recourse factoring.

Minimize Financial Instability

Seize New Growth Opportunities

Customer Solvency Exclusions

Higher Fees than Recourse Factoring

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How Non-Recourse Factoring Works

The process of factoring without recourse is straightforward. Continue to offer your products or services, collect invoices as you normally would, and then sell them to a non-recourse factoring company. In a non-recourse arrangement, the factor assumes the credit risk associated with the invoice.

Understanding this process is essential to assess your business financing options, as it helps you gauge the benefits and potential drawbacks of non-recourse factoring.

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Application & Approval of Invoice Factoring - REV Capital

Credit Control & Invoice Collection - REV Capital

Hidden Risks of Non-Recourse Factoring

While many companies claim to provide non-recourse factoring, businesses need to understand that the term "non-recourse" isn't always as straightforward as it sounds.

In the world of factoring, true non-recourse implies that the factor assumes all credit risk, meaning you are not responsible for repurchasing an invoice if your customer defaults. However, some non-recourse factoring companies include contractual nuances that shift some risk back onto your business. Here's a breakdown of how this can happen:

Customer Quality Evaluation

Non-recourse factors rigorously assess your customers’ creditworthiness and you may have to repurchase poor credit invoices.

Undisclosed Limitations

Factors may not fully disclose non-recourse limits, leaving you to assume the risk for those transactions.

Concentration Limits

If you exceed a certain invoice limit from a single customer, some factors will send those invoices back.

Termination Clauses

Factors can terminate non-recourse agreements, leaving you responsible for repurchasing outstanding invoices.

Insolvency Exclusions

Non-recourse excludes customer insolvency; defaults due to financial distress may lead to factor pushback.

Notification and Cure Periods

Failure to meet stringent notification requirements for reporting potential defaults transfers the risk back to you.

Compare to Recourse Factoring

Non-Recourse vs Recourse Factoring: What’s the Right Choice for Your Business?

Choosing between recourse and non-recourse factoring depends on the specific needs, priorities, and risk tolerance of a business. While non-recourse factoring offers certain advantages, recourse factoring can be a strategic and cost-effective choice for many businesses.

Explore the facets of both recourse and non-recourse factoring to find the perfect fit for your unique needs.

Aspect

Non-Recourse Factoring

Recourse Factoring

Advance Rate

Up to 98% of the total invoice value.

Factor Fees

0.5-1.0% higher than recourse factoring.

Typically 1-3% of the total invoice value.

Credit Risk

Factor assumes credit risk.

Business retains credit risk; responsible for repayment.

Customer Approval

Stringent customer credit checks.

More flexibility in approving a diverse range of customers.

Customer Relationships

Factor manages collections.

Business retains control over collections.

Flexibility

May have limitations on eligible industries or customers.

More flexible in accepting a broader range of invoices.

Insolvency Coverage

Typically excludes customer insolvency as a covered risk.

Business may bear the risk of customer insolvency.

Long-Term Partnerships

Suited for businesses looking for risk mitigation.

Ideal for businesses with strong credit management.

Control Over Collections

Limited control; factor handles collections.

REV Capital manages recourse factoring collections.

Risk Management Strategy

Good for businesses wanting to transfer credit risk.

Suitable for businesses confident in managing risk.

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How Factoring Empowers Your Business

If you’re struggling to collect invoices and protect your business against bad debts, a risk-free factoring agreement will give you the peace of mind you need.

Invoice Factoring Right For You - REV Capital

Lack of Consistent Cashflow

Inconsistencies in your cashflow can make it difficult to cover regular expenses like rent and payroll. No matter what happens, we’ll help stabilize your cashflow and keep your business’s operations on the right path.

Rapid Growth

Your business’s growth depends on how well you take care of your accounts receivable and handle non-payment cases. Ensure you always have the working capital you need by partnering with one of the best non-recourse factoring companies.

Seasonal Fluctuations

Seasonal fluctuations can impact your business unexpectedly. Consider invoice factoring if you’re tired of worrying about the off-season and making ends meet. Feel confident in your ability to do great work year-round.

Payment Delays

Let payment delays be a thing of the past with invoice factoring! Shifting the burden of chasing down non-paying customers to us to free up your valuable resources, allowing you more bandwidth to focus on what matters.

Unexpected Events

It pays to be prepared for the unexpected. Feel confident knowing one of the best non-recourse factoring companies is in your corner.

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Powering Diverse Industries With Factoring Solutions

Non-recourse factoring often comes with limitations on eligible industries or customers due to stringent credit risk requirements. In contrast, recourse factoring offers businesses greater flexibility, accepting a broader range of invoices and accommodating diverse industries and credit ratings.

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REV Capital is proud to be the invoice factoring company of choice for a wide array of businesses. We’ve helped everyone, from government contractors to trucking companies, get paid for their work. Our experience speaks for itself!

Government Contractors

Oil & Gas

Marketing & Advertising

Disaster Recovery

Wholesale & Distribution

Service-Based Businesses

Consulting

Consumer Packaged Goods

Food & Beverage

Medical & Health Services

Import & Export

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1
You provide a product or service to your customer

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You send your invoice directly to REV Capital

4
We wait for your client to pay us per their terms

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We pay you up to 95% of your invoice value same-day

5
We return the 5% holdback to you less a samll fee

based on Trustpilot reviews

Why Clients Choose Us

By far the best in the business. I have never worked with a company more responsive, professional and collaborative. Our Client Relationship Manager is always available even after hours and they are always trying to find solutions to save us money and time.

Sam Ibrahim

Excellent customer service and great company to work with. We transferred our account from a different factoring company and it has been so much easier working with REV Capital.

Forte Freight

The biggest reason we appreciate this company is their amazing staff. Always courteous and friendly, and their expertise is top notch. They value each and every one of their customers, and that comes across clearly. If I could give them a million stars,I would.

Cynthia C.

Onboarding With REV

What You Need To Get Started

Some information about your business

Tell us a bit about your business and customers. We've probably served your industry before, but every business is unique! Like most financial institutions, REV requires standard KYC documents such as Articles of Incorporation, Business Licenses, IDs, and Financial Statements.

Basic details about your invoices

In order to purchase an invoice, REV requires the same documentation that your client needs in order to pay. This usually includes the invoice, confirmation, and proof of service.

A signed application form

Filling out an application couldn't be simpler. A few quick questions stand between you and cashflow freedom!

Qualifications

B2B service provider

Creditworthy debtors

Clear audit trail

North American customers

Monthly volumes up to $10 M

No consignment sales

No pre-billing

No liens on A/R

No warranties

No progress billing

Getting started couldn’t be simpler. Some changes are hard.
This one is easy.

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FAQs About Non-Recourse Factoring

What is non-recourse factoring?

Non-recourse factoring is a financial arrangement that provides businesses with working capital by selling their accounts receivable to a third-party financing company.

What’s the difference between non-recourse and recourse factoring?

What is an example of factoring without recourse?

Imagine your business provides a service for companies A, B, and C. Once you collect invoices for those three transactions, you sell them to a non-recourse factoring company such as REV Capital as part of your agreement. REV Capital then collects from Company A and Company B, but is unable to secure payment from Company C. Rather than ask you to buy back the unpaid invoice from Company C, REV Capital will assume the loss.

Thoroughly review your contract for any hidden clauses to ensure the factoring company takes on and assumes the risk of unpaid invoices and it won’t fall back on you in case of non-payment.

How quickly can I receive funds through invoice factoring?

When working with a reputable non-recourse factoring company like REV Capital, we pay you as quickly as possible after you’ve submitted your invoices!

What fees are associated with invoice factoring?

In both a recourse and non-recourse factoring agreement, you will generally be charged a flat fee ranging from 1% to 5% of the invoice value. However, the exact value will depend on the factoring company’s risk evaluation. Recourse factoring generally has lower fees, but this comes at the expense of having to potentially buy back unpaid invoices.

Can I factor invoices for international transactions?

Generally, we only factor in U.S. and Canadian currencies, but sometimes we make exceptions! Contact the REV Capital team for more information.

What happens if my customer doesn’t pay?

If you’re working with a non-recourse factoring company, then you do absolutely nothing if your customer doesn’t pay. As such, this kind of accounts receivable factoring is great for businesses whose clients have poor payment histories. Be sure to check the fine print before finalizing any agreements to ensure the factoring company assumes the risk of unpaid invoices.

Considering Non-Recourse Factoring?

Understanding Non-Recourse Factoring

How Non-Recourse Factoring Works

Invoice Submission

Verification

Funding

Customer Payment

Final Payment

Hidden Risks of Non-Recourse Factoring

Choosing factoring should be choosing confidence.