This is a funding, collections and bad debt protection solution
Like Factoring, this solution releases the cash tied up in unpaid invoices and takes away the time consuming task of chasing and collecting payments.
Some factoring providers will also offer bad debt protection (via a credit insurance scheme) as part of the package (known as “non-recourse factoring”). So if one of your customers fails to pay an undisputed debt or becomes insolvent, the factoring provider will credit you with the amount of the debt up to the agreed credit limit.
Bad debt protection gives peace of mind as it protects your business against the risks of one or more of your customers failing to pay you for the goods or services you have delivered.
Benefits of factoring with bad debt protection
Immediate cash injection
By releasing money as soon as an invoice is raised, rather than having to wait 60 plus days for your customer to pay, meaning you have funds available to use in your business immediately.
Improved cash flow
Means you can tender for new business and start work on new orders without delay. You can settle bills promptly, improving supplier relationships and possibly secure early settlement discounts.
Ongoing working capital
Factoring allows flexibility. The funds you can access grow in line with sales and without the need for you to re-negotiate overdraft limits. By accessing funds from invoices immediately, it’s often possible for you to repay bank facilities and release previously pledged security. Some factoring providers are also prepared to provide finance against other assets, or even unsecured loans, as part of a packaged solution.
Save management time
Factoring with bad debt protection frees up valuable management time by providing a cost effective way of outsourcing your sales ledger management and collections.
Peace of mind
Factoring with bad debt protection offers peace of mind as it means that you get paid, even if one of your customers is unable to pay you.