Each factor will evaluate risk differently, with some being more open to specific factors than others.
Generally speaking, here are the two points that will be most decisive in your decision.
Your customers' creditworthiness
The creditworthiness of your clients is used to determine your customers approval. A customer with very bad credit history could be refused factoring.
The Stability of Your Business
While the age or credit history of your business won’t prevent you from getting approved for invoice factoring, these factors are considered.
The risks of non-recourse factoring
It is important to note that non-recourse factoring does not protect your business from all risks and usually comes with strict conditions such as credit limits, concentration restrictions, and other criteria.
In most cases, the factoring company will only assume the risk in very specific circumstances, for example, if your debtor declares bankruptcy. Plus, if your debtors have bad credit histories, their invoices may not even be eligible for non-recourse factoring.
