Now that you’ve decided whether you’re more of a Darlene or a Jennifer, it’s time to think about whether you want an agreement with or without recourse. You can also opt for selective invoice finance for more flexibility, and to remain in full control of your sales ledger.
Alternatively, you might want to look at invoice factoring solutions that are tailored to the specific needs of your trade. The haulage industry offers freight factoring, a flexible form of finance for truckers, while there are plenty of companies offering specialist factoring for recruiters, too.
Let’s break down some of the industry jargon.
Turn those dusty unpaid invoices into fash cash flow to help grow your business
An invoice factoring deal with recourse means that you’ll remain liable for the debt. If your client becomes insolvent and can’t pay (or just won’t pay, for a prolonged period), then it’s bad news - you’re not getting the money back.
With no recourse
Agreements without recourse mean that responsibility of your unpaid invoices lies with the factor. It mitigates the financial loss for your business when your clients don’t pay up.
Of course, this kind of agreement doesn’t come cheap, and it’s not for everyone. But, if you have unreliable clients and don’t want to risk shouldering the brunt of bad debt, it’s almost certainly worth the extra outlay.
Selective invoice finance
Also known as spot factoring or single invoice discounting, this option is a more flexible form of invoice finance. Why? Because, rather than having to submit your whole sales ledger to be factored, you can factor just as few (or as many) invoices as you like.
In normal invoice factoring deals, you’ll have to sell your whole ledger - which, depending on the size of your business, could be hundreds (or even thousands!) of invoices. Obviously, this isn’t exactly ideal, especially if you’re a small business in need of a small sum of cash freed up in the short-term.
That’s where spot factoring comes in handy. By factoring a select amount of your invoices, you only get finance on what you need - not your whole ledger.