Recourse Factoring

31/01/2023

Now that you have understood the concepts of how Non-Recourse Factoring works, we will now look at India Factoring’s Recourse Facility.

Recourse Factoring

Recourse Factoring works in a similar manner to Non-Recourse Factoring except for one difference – your Buyer Risk is not covered by India Factoring. Let us see how Recourse Factoring works.

What needs to be done to set up a Recourse Factoring Facility?

If you need a Recourse Factoring Facility with India Factoring, you need to follow the below steps:

• Approach India Factoring with your Details and your Buyer’s details on whom you need a Recourse Factoring Facility.
• There will be specific details required of your Buyer, so please get in touch with India Factoring and they will provide you with a Checklist of what is required.
• India Factoring will do an assessment on your credentials and your Buyer’s credentials and grant you a Recourse Limit on your Buyer
• You can give more than one Buyer and India Factoring will set up Limits on each Buyer

How do I utilize the Recourse Factoring Facility?

• You ship Goods to your Buyer
• You assign Invoices and submit all supporting documents to India Factoring
• India Factoring will finance you 80% to 90% of the Invoice Value less applicable Charges immediately, if documents are in order
• On Due Date, India Factoring will collect the money from your Buyer and pay you back the balance 20% to 10%

What happens if the Buyer fails to Pay the money on the Due Date?

• India Factoring may set up Grace Days for each Buyer, called as a Recourse Period
• The Grace Days may be different for different Buyers
• India Factoring will try to collect money from your Buyer up to the Grace Days
• After the end of the Grace Days, you will have to pay back 80% or 90% of the amount Financed to you
• India Factoring does not charge you Penal Interest for these Grace Days

So, what are the Advantages of Recourse Factoring?

• Your Cash Flow improves – you get 80% to 90%of the Invoice Value immediately on submission of documents after shipment
• Because of the Grace Days, you may get an extended time to cover up administrative delays by your Buyer
• You are not penalized with Penal Interest immediately on Due Date. Penal Interest starts only after the end of Grace Days which is very beneficial to you
• If your Buyer does not pay on Due Date, India Factoring does not raise a Demand immediately after the Due Date for repayment of Financing unlike Banks do. Your  cash flow does not get stressed and you get adequate time by way of Grace Days to pay back, if necessary
• If you are an Exporter, you need not use your Bank for sending Export Documents to your Buyers (which is the case if you use FinTech or Overseas Financiers) – India Factoring will take care of all your requirements as it is an Authorized Dealer approved by the RBI – One stop shop!!
• Because of the above point, you save on all the Bank related Charges which come along with sending your Export Documents and getting money through your Bank
• India Factoring’s Recourse Factoring Facility is Unsecured, and your Assets are free for you to pledge to Banks or other Financiers for any other facility that you may need
• India Factoring will give Facility Limits on your Buyers – which helps you controlling your Cash Flows as the money that you will get under the Facility is directly linked to how much you ship to your Buyer

 

If the above benefits impress you, our suggestion is to immediately contact India Factoring and Finance Solutions Pvt Ltd and discuss your business requirement for your Recourse Factoring Facility. Please write to us at info@indiafactoring.in or call us at 022-44125555.