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Bad Debt Protection

What is non-recourse factoring and how when should I choose it over recourse factoring?

The most common type of invoice factoring is recourse factoring, where the factor has purchased your invoices, given you an advance and will try to collect on your unpaid balances for you. In the event that they can’t collect any of these invoices after the time period specified, they will have recourse to make you responsible for the bad debt. In short, with recourse factoring, your factor will do everything they can to collect on your unpaid balance, but if they can’t you will still be held responsible for the debt. As a result, recourse factoring is much more affordable for businesses.

Non-recourse factoring on the other hand leaves the factor with all the risks, but is much more secure for your business. The factor will take responsibility for all outstanding debts in your accounts receivable, even on money owed that never gets paid back. Unlike with recourse factoring, where you will still be responsible if a client or buyer decides not to pay, non-recourse factoring providers assume all the risk of a non-paying debtor, although at a higher rate for those they do make collections on. This is a great solution for companies with just a few high-paying clients they manage, and are unsure on the debtor’s ability to pay. While rates for funds collected on will be higher, the advantages and protection against non-payment are priceless.

What is bad debt protection?

Bad debt protection is a product that can be added to your invoice discounting or factoring facility that ensures that you still receive payment in the event that your customer can’t settle their invoices.
We offer 100% protection on customers who have been pre-approved by our credit team, which means that you have peace of mind that customer insolvency won’t negatively impact your cash flow.

How does bad debt protection work?

Should customer insolvency arise, we will handle the entire procedure on your behalf. We will liaise with the insolvency practitioner and, once we are in receipt of all necessary supporting documentation, the process will be resolved within as little as two weeks.

We have an expert Credit Management Team that will work with you to assess any potential risks from your existing or new customers, carrying out credit checks and providing advice on request, minimising your exposure to bad debts.

The benefits of bad debt protection:

  1. 100% protection against bad debts from customers pre-approved by our Credit Team

  2. Direct access to our expert in-house Credit Management Team

  3. Saves time and money in the event of customer insolvency

  4. Includes credit checks and advice on new customers