What is recourse factoring?
Resource factoring is a form of finance where a company sells its invoices to a factoring company. The factor pays the company a percentage of their cash value and then chases up payment of the invoices on behalf of the company.
Once full payment is received the factor reimburses the company with the remaining balance of the invoice and this is all done for a fee. The agreement with recourse factoring finance is that if an invoice is unpaid or paid late then the Company will have to absorb the costs not the factor and buy back the invoice.
What is non-recourse factoring?
Non-Recourse factoring is a form of finance where a company sells its invoices to a factor and receives a percentage of the cash value from them. The factor will then chase up the invoices and once full payment is received will reimburse the company with the remaining balance of the invoice.
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.
What are the advantages and disadvantages of Recourse Factoring?
Advantages of Recourse Factoring:
- It's a cheaper form of finance than non-recourse factoring
- Less stringent credit checks made on the invoice clients than with non-recourse factoring
- The approval process is likely to be quick
- Most of the invoices value is paid to the company
Disadvantages to Recourse factoring:
- The company, not the factor, is liable for any unpaid invoices.
- If the company can’t afford the debt created by unpaid invoices then further action can be taken by the factoring company to retrieve it
Non-recourse factoring advantages:
- It can be a risk free form of finance
- Beneficial for companies whose main business comes from a small number of customers
Non-recourse factoring disadvantages:
- The cost of this type of finance can be high
- The terms by which unpaid invoices will be covered by the factoring company can be narrow so under certain circumstances the company may still be liable for unpaid debt
- It can be difficult to secure non-recourse factoring finance as the factor takes on more risk so applications can be lengthy and thorough
What are the key differences between recourse and non-recourse factoring?
The differences between recourse and non-recourse factoring are essentially who becomes liable for debt created by the non payment or late payment of invoices.
With recourse factoring finance if an invoice is unpaid or paid late to the factor then it is up to the company to buy back the invoices and either settle the debt or chase up payment with its customers.
With non-recourse factoring finance if an invoice is unpaid or paid late to the factor it is the factoring company who absorbs the debt.
We are an award winning invoice finance company
Highly recommended by our customers
"The communication and support has been outstanding. Providing me with all the information I needed regarding new clients coming onto our books. The system they use is so user friendly and the drawdown payments are very efficient in the fast moving world of temporary payroll."Read full review
Recourse and non-recourse factoring have been revolutionised with our digital onboarding process
Why choose Novuna Business Cash Flow
6 month trial period
A 6 month trial period so you can be sure the product is right for you, followed by a 6 month rolling contract – we don’t tie our clients in for long periods.
We are the first in the market to offer a digital onboarding process and have been leading the way with our digital capabilities allowing clients to sign up within 24 hours from the first appointment.
Client trust account
Once you become a client you will be given your own trust account, meaning you will get same day availability on your funds. You can also view all of your invoices and payments online at a time suitable to you, 24/7.
No uncleared effects
We have heavily invested in our digital capabilities. This includes the auto allocation of payments using Artificial Intelligence. Ultimately this advance in technology means that our clients access money quicker as well as saving money on interest charges due to auto allocation.
We aim to make the process of Cash Flow finance as simple and straightforward as possible. Our pricing is very straightforward to understand. For a no obligation quote or an informal chat you can call our friendly team today on 0808 250 0859.
Award winning service
We offer award-winning client services and individual Relationship Managers who are on the other end of the phone or out in the field to visit you in person.
What our customers say
A very professional and yet friendly company to deal with.
The whole team have been keen to understand how our business works including the peculiarities of our industry and as a result, our specific needs for working capital. Subsequently, they have been supportive of our changing needs and open to suggestions to help improve our business model and profitability further.
Competent staff, slick technology. Would recommend
Halo is one of the smartest bits of tech I have seen & every team is only as good a it's people and I would like to take this time to actually specifically point out Alex Hall & Claire Davies. Alex is an account manager that has continually improved during our time working together and is a real credit to Novuna. Claire has been exceptional from start to finish; meticulous in her work and very patient with us at every temp - an absolute star. It is a shame that the email address went to a generic platform and not each individual. I totally understand why this works better for companies but it did mean that the personal element was lost meaning that starts like Claire will be harder to identify from a customer point of view.
High recommedation for Novuna Business Cashflow.
My company was in need of invoice factoring to assist with the cashflow due to the nature of debtor days with our clients. After looking at a number of options, the right decision was made to work in partnership with Novuna Business Cashflow. Right from setup through sales to customer service, the communication and support has been outstanding. Providing me with all the information I needed regarding new clients coming onto our books. The system they use is so user friendly and the drawdown payments are very efficient in the fast moving world of temporary payroll. This has allowed my company to look at positive growth knowing we are safe financial hands. I would highly recommend Novuna Business Cashflow 10/10.
Set up went well and communication was good.
Syed and Vipul were extremely helpful top class service
Very helpful from the start
Great people made this process very straightforward.
Jemma from Novuna (formally Hitachi) was brilliant. Worked with us throughout the process and succeeded when some others had failed. Carried out the necessary checks with a smile and cheery demeanour, making what would have been a laborious process quite manageable.
Teething problems -Maybe ?
It's still early days so I may alter this review at a later date. However with retentions and concentration limits and other items, were finding were not getting 85% up front, were probably getting nearer 70% Also when a customer pays the remaining allegedly 15% due to us seems not to be credited to become available. For instance a customer paid Â£6918 and a customer paid Â£1300 hence we should see an extra Â£1330 available (15% of both these payments). However availability seemed to go down and not up by Â£1330 !!! Hard to work out where this 15% has actually gone ? I'll re-submit this review when things become clearer.
I found Hitachi true to their world in every aspect of the service they promised. I can't recommend enough.
Excellent Customer care and service.
Excellent customer service from start of initial conversations, right through to finally becoming a customer. The whole team involved are a credit to Hitachi, they were accommodating and informative the whole way along the process. I would highly recommend Hitachi to future clients and business associates. Thanks Alan.
I really enjoyed working with the Hitachi team, professional, helpful and really good people to deal with. They have made what could have been a very difficult experience a pleasure. Very happy to recommend them.
Hitachi made the process of moving factoring facilities painless, bearing in mind we previously had our facility with the same provider since 1997. I cant fault Hitachi's staff and processes and we are delighted with the move.
Staff excellent all together professional
Alternative invoice factoring products from Novuna Business Cash Flow
Spot factoring is a way for a business to access funds by selling unpaid invoices to a 3rd party, a spot factoring company, on a one off basis in order to receive payment quicker.
Reverse-factoring is a financing option where a 3rd party financial provider finances the supplier on behalf of the buyer. The process involves the supplier, the buyer and the finance provider .The supplier sells the buyer’s unpaid invoice to the finance provider and receives the cash quickly, the buyer also gets longer to pay for its goods.
Account Receivable Factoring
Account receivable factoring provides businesses with an option to finance their venture without taking out a loan. This is a type of debtor finance where SMEs sell its invoices to a third party at a discount, in order to provide an immediate cash injection. There are many reasons why a business may factor an invoice, including increasing cash flow and mitigating credit risk.
Debt factoring is a finance facility provided by a debt factoring lender to help businesses leverage their acccounts receivable enabling them to instantly inject cash into the business. The debt factoring company pays the business a percentage of the total amount charged to the client and usually takes full responsibility for collecting the payment from the buyer.
Want to learn more about how you can boost your businesses cash flow?
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