Recourse vs. Non-Recourse Factoring

What is the difference between recourse versus non-recourse invoice factoring? There are two main things to consider when trying to decide whether to choose factoring with or without recourse, these are responsibility and money. 

When you enter into a factoring agreement, if you choose an agreement that includes recourse then if the factoring company is not able to collect on any of the invoices within a specified amount of time they may be returned for you to collect on your own.   Entering this type of agreement usually costs you less because you are agreeing to take back the responsibility of collecting on invoices if your factoring company is not able to settle them. 

If you choose to enter into a factoring agreement without recourse it will cost you slightly more but you will not have to worry about whether the factoring company will ever be able to collect on the debt or not. 

Non-recourse factoring is less common in most factoring company industries, it is most commonly found in the transportation industry.

Both of these options have pros and cons so take a look at both and decide what you feel will work best for you and your company.

Health Care Provider Factoring

One may think that the medical or health care provider industry would not be affected too greatly by a struggling economy.  However, you have to consider the slow to pay insurance companies, the increasing numbers of medicare and medicaid recipients during hard times, and the number of people without health insurance due to job loss who are not able to keep up on medical care or expenses.  All of these factors can make the cash flow of the medical profession very tough. 

Factoring may be a viable solution for this type of cash crisis situation.  There are many things to consider when choosing the best factoring company for you and your business.  Make sure you do your research, get a few different bids, and choose a company that works for you.

Cash for Your Structured Settlement

Have a structured settlement?  Need instant cash?  In these economic times many of us are finding ourselves in financial situations we had not considered before now.  There are many companies that are willing to give you instant cash for your structured settlements.  In doing so you are signing over your rights to your annuity payment.  However sometimes this can be a good choice because in the event you are in need of a government assisted program like medicaid or medicare you are not allowed any structured settlements and the cash may be able to help you. 

If your company is not currently accepting credit cards then another means of creating cash flow may be to start accepting credit cards.  Many  credit card merchants offer many businesses the opportunity or ability to make more money simply by accepting credit cards.

Structured Settlements

What are they? Who are they for? Why do you want one? All good questions on structured settlements. 

We get questions all the time like this and so we decided to put some articles on our website to discuss. These include: What are Structured Settlements and Annuity vs. Lump Sum.   Many companies that offer invoice factoring will offer cash for structured settlements. These companies can usually wait a longer period of time for the money that is due over time – where the average consumer may have bills or other liabilities they’d like to take care of.

A little on structured settlements – suppose you get get into a car accident with someone (and it’s their fault) – you suffer significant damages - and the insurance company settles with you where they agree to pay you over time. This would be called a structured settlement.  In this scenario you may have many medical bills to pay or lost wages. You might need to sell the structured settlement for upfront cash. This is where the factoring company comes in or a larger player such as JG Wentworth (you may have seen the ads on TV).  They would buy the note that is payable by the insurance company for a discount. They might pay you up to 90-95% of the note – just depends on how much time is on the note or how long they have to pay.   It really all just depends on a few factors.

These factors could include: size of note, amount of time, the nature of the note, and the size/reliability of the company that owes the payment. Each company that buys these notes has a little different formula so it’s a good idea to shop it around if you’re looking to sell a note.

Be sure to check out the articles – they will give you a better idea of what to expect. We’ll also be posting many other articles on the site very soon on the same topic.

Thanks and good luck!