![]() It is simple to operate, with limited administration, whereby the business retains complete responsibility over managing customer payments and credit controls. However, confidential invoice discounting services are available for businesses that want customers to be unaware of lender involvement. On the other hand, non-recourse factoring assumes that the lender assumes customer non-payment risk.įor both recourse and non-recourse factoring, lenders support credit control and collections by providing sellers with services that help manage the sales ledger by issuing statements and provide credit control services through letters or phone calls to buyers under credit control. Recourse factoring assumes that customer non-payment risk is covered by the debtor (seller). The two main types of cashflow finance are recourse or non-recourse. Credit limit to the revolving facility is sanctioned based on the assessment the borrower’s credit risk. Such type of finance is also termed as factoring, invoice discounting or sales/invoice finance.Ĭashflow finance enables the business to release the money it's owed by its customers (account receivables) to fund business growth or to meet the day-to-day financial obligations. The source of income for paying back the loan is in the debtor settling outstanding invoices. Cashflow finance is also known as sales finance and includes specific financing solutions such as factoring and invoice discounting.Ĭashflow finance uses a revolving credit facility in which new invoices received will make new funding available. The primary security for cashflow finance is sales invoices. Hence, cashflow finance assists businesses with the financing required to deliver purchase orders from buyers. This type of finance bridges the funding gap created during the period from the time of an invoice is issued to a buyer to the time that the buyer pays for the goods/services.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |