AR Management and Credit Protection

When you get factoring through Spearfish, you also get world class AR management and credit protection, saving you money and time. And you’ll say goodbye to bad debt. Here’s how it works.

What Is Invoice Factoring?

Invoice factoring is a form of business financing that adds no debt to your balance sheet. We arrange for our financial partners to buy your invoices.

  • Depending upon the specifics of your case, you’ll receive 80%-90% of the value of your invoices immediately.
  • You receive the remaining amount when your customers pay, minus a small fee for the factoring service.

Protection Against Your Customers’ Bankruptcy

All factoring obtained through Spearfish comes with credit risk insurance. This protects you against the potential bankruptcy of your customers. If one of your customers who owes you becomes insolvent during the factoring period, you won’t be liable for the amount advanced to you and you’ll still be paid the remainder owed.

This is called “non-recourse” factoring and the majority of factoring companies do not offer it. If you scrutinize the ‘small print’ of many “full recourse” factoring companies, you may see mention “installment agreements.” If your customer fails to pay their invoice, a full recourse factor may pursue you to ‘revoke’ the payment they made. “Full recourse” factoring can therefore add debt to your bottom line and lead to a debt spiral.

Only non-recourse factoring offers business financing that doesn’t add debt to your balance sheet.

Note: credit risk insurance is also referred to as trade credit insurance, business credit insurance, or simply credit insurance.

Professional AR Management

Once you enter into a factoring agreement, your customers will pay their invoices directly to our financial partners. We have a world class team with over 20 years of experience, that operates as your de facto AR department.

They will focus on ensuring that there are no errors in the invoicing process. As a result, we typically see DSO (Day Sales Outstanding) decline for our clients.

Credit Manager

Our team can also serve as your credit manager, saving you $50,000 - $60,000 a year on hiring one. For example, the team can review your top prospects’ credit, based on extensive data we have access to, and make recommendations to your sales team on who to prioritize.

This helps businesses to avoid sinking resources into onboarding new clients that may result in charge-offs.

Sound interesting? We invite you to book a phone consulation with us to learn more.

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Credit Risk Insurance