What is the difference between reserve and non-reserve factoring?

Reserve Factoring

With a traditional reserve factoring setup, the Factor advances a smaller amount to the Client to maintain a reserve (escrow), which functions similarly to a deposit in the event that purchased invoices go unpaid.

Once the invoice is paid, the reserve is generally repaid in full to the client.

Typically, the Factor will withhold 10-20% from the Client’s advance for reserve maintenance on an ongoing or continual basis.

Example

Client sells a $10,000 invoice to the Factor. The Factor advances the Client 90% (or $9,000) of the up-front invoice, and holds 10% (or $1,000) for the Client’s reserve.

When the Debtor pays off the invoice to the Factor, the Factor will reimburse the Client their reserve less any Factor Fees.

If the Client’s factor fee is 4%, the Client will be reimbursed $600 from their reserve, which is $1,000 reserve withholding less the $400 factor fee.

Non-Reserve Factoring

Client sells a $10,000 invoice to the Factor. The Factor advances the Client 95% (or $9,500) of the up-front invoice. The factor fee, or $500 in this example, is withheld from the advance.

Match Factors offers both reserve and non-reserve factoring program options to its clients. However our standard reserve program differs slightly from traditional reserve factoring, and it better suited towards our Client needs.

What is the difference between recourse and non-recourse factoring?

Recourse Factoring

Recourse factoring is an agreement between Factor and Client that should a Debtor fail to pay all or some of the invoice amount, the Client is liable and must repay the short paid or unpaid invoice amount back to the Factor.

Recourse factoring generally offers Clients lower factor/discount fees in exchange for the increased Client risk.

Non-Recourse Factoring

In non-recourse factoring, the Factor offers credit protection to Clients in instances where Debtors fail to pay off invoices due to bankruptcy or business closure.

Non-recourse factoring is available for each invoice, however Clients are still responsible for unpaid invoices resulting from claim offsets, operational issues, paperwork problems, customer disputes, etc.

Non-recourse factoring provides added security to Client, but general results in a higher factor/discount fee for the Client from the increased risk on the Factor’s part.

When considering between recourse and non-recourse factoring options, Clients need to be aware that most Factors provide some type of credit check service. For the most part, Factors have an abundance of credit resources at its disposal.

As such the likelihood of a Debtor not paying an invoice due to credit issues or business solvency issues are low.

Most unpaid or short paid invoices result from Client load performance, paperwork, claims, etc. issues, and these items will be charged back to the Client regardless if they are in a recourse or non-recourse program.

Who handles billing and collections?

When you factor an invoice with Match Factors, we will handle the billing and collections. Our collection efforts begin soon after you submit your invoices. Furthermore, you will have online access to status of all your open invoices.

Do I have to commit to a monthly minimum?

Not at all; with Match Factors, you can factor as few or as many invoices each month as you want to suit your business needs.

How can I receive funding?

Simply complete and submit your application and once you are approved, send us your invoice to receive your advance within 24 hours.

Will I have to sign a long-term contract?

No, Match Factors does not require long-term contracts. While some companies may require a long term contract to ensure profitability, Match Factors puts the client first by providing a simple contract with no time or volume requirements, or any hidden or exit fees. We’re here when you need us.

Do I have to factor all of my invoices?

No, Match Factors offers clients the flexibility to factor only the invoices you need.

How quickly will I be paid?

Once you submit your invoice you will receive payment within 24 hours, guaranteed.

What percentage of payment can I be advanced?

Match Factors offers an advance rate of 95% or higher on factored invoices.

What if I'm a new carrier?

We are happy to work with new carriers and offer valuable benefits like free credit checks for customers and a convenient online portal to view open invoices to help you build your customer base and business.

How long does the application and approval process take?

 Applications can be submitted, reviewed, approved, and funds advanced all within the same day.

What type of freight do you factor?

With the exception of automotive carriers, we factor most forms of commercial truck transport. However, our specialty is general freight. To learn more, contact one of our helpful representatives and see if you qualify for factoring with Match Factors.

What is a reserve?

A Reserve (also called an “Escrow”) is money held from a Client’s advance that acts as a guarantee of payment on the chance that a customer fails to pay on an invoice.

What is the difference between freight factoring and a bank loan?

With a bank loan, you must go into debt and pay interest while continuing to struggle to collect on invoices from customers. With factoring, we purchase your invoice from you and collect the invoice on your behalf, charging only a small service fee. With factoring, you never go into debt.