{"id":3065,"date":"2017-05-12T10:00:28","date_gmt":"2017-05-12T10:00:28","guid":{"rendered":"http:\/\/blog.novicap.com\/blog\/?p=3065"},"modified":"2019-09-10T15:21:07","modified_gmt":"2019-09-10T13:21:07","slug":"non-recourse-factoring","status":"publish","type":"post","link":"https:\/\/novicap.com\/en\/blog\/non-recourse-factoring\/","title":{"rendered":"Non-recourse Factoring vs. Recourse Factoring"},"content":{"rendered":"

Factoring can be a confusing part of a company\u2019s finances, especially when taking into account the different forms of factoring that exist. We’ll explain to you the difference between two forms of factoring: Non-recourse factoring vs. recourse factoring.
\nMost companies use factoring without recourse due to a lack of knowledge regarding factoring options. In the following we are going to explain the difference between the two before exploring the idea behind factoring without recourse which is the most common way of factoring.<\/p>\n

What is Factoring?<\/h1>\n

Factoring is used to improve cash flow and to access cash tied up in invoices faster.
\nFirms often struggle with payment terms of 30 or more days. They provide products and services but do not get paid for another 30 days after issuing an invoice. In this time they often have to pay their own suppliers and employees without having been paid themselves.<\/p>\n

Factoring helps with this problem: An issued invoice is bought at a discount by a factoring firm which allows the issuer of the invoice to receive funds at the time of issuance rather than when the invoice is paid by the debtor.<\/p>\n

Factoring involves three parties:<\/p>\n