Factoring Agreement Draft With Recourse In Fairfax
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Recourse is more common than non-recourse factoring. Many factoring companies are weary of non-recourse as it means they are liable for debtor non-payment. Still, there are many advantages to working on a recourse agreement for business owners. For one, advance rates are usually higher.
Factoring Application. Filling out a factoring application is very easy, yet one of the most important requirements for invoice factoring. Accounts Receivable Aging Report. Copy of Articles of Incorporation. Invoices to Factor. Credit-worthy Clients. Business Bank Account. Tax ID Number. Personal Identification.
Two Types of Factoring There are two main types of factoring - recourse and non-recourse. 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.
Factoring without recourse means that the risk of accounts receivable being uncollectible transfers from the buyer to the seller. Basically, if an accounts receivable cannot be collected, the seller does not have to reimburse the buyer like they would if the factoring was “with recourse”.
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.
There are two types of debts: recourse and nonrecourse. A recourse debt holds the borrower personally liable. All other debt is considered nonrecourse. In general, recourse debt (loans) allows lenders to collect what is owed for the debt even after they've taken collateral (home, credit cards).
