The benefits of non-recourse factoring are:
- You receive immediate liquidity on shipment. You can use these funds however you choose - to pay off your suppliers or to repay expensive debt.
- You get protection against default by your buyer due to insolvency, as MODIF takes over the credit risk on your buyers up to the advanced amount.
- You do not have to pledge any collateral nor personal guarantee.
- The financing is structured as a true sale of the receivables and should function as ‘off-balance sheet’ financing. It should not affect your debt ratios (and does not affect your borrowing capacity). Accounting-wise, the receivable should convert into cash, without adding any liability. You should confirm this with your accountant.