Factoring Agreement Document With Recourse In Cuyahoga
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Recourse factoring is typically better for clients with reliable customers and those who want lower factoring fees. Non-recourse factoring is typically better for those with a higher risk of bad debt due to less reliable or riskier customers.
The period of factoring usually extends from 90 to 150 days. In some cases, companies can extend this period beyond 150 days.
Recourse factoring is the most common and means that your company must buy back any invoices that the factoring company is unable to collect payment on. You are ultimately responsible for any non-payment. Non-recourse factoring means the factoring company assumes most of the risk of non-payment by your customers.
Factoring Application Applications vary depending on the factor's needs, but most of them ask for things like business and personal phone numbers, email addresses, and business details. Applications also normally ask for your business' industry sector and your monthly invoicing volume.
How to Record Invoice Factoring Transactions With Recourse Record a credit in accounts receivable for the sold invoice in the amount of $375,000. In the recourse liability column, record a credit after estimating the bad debts and any other possible losses ($750).
The agreement with non-recourse factoring is that, within certain conditions, if the payments are late or unpaid then the factor absorbs the costs, the company does not have to worry about debt created by unpaid invoices.
