Case Study - Is Non Recourse Delivering Value?

Many clients want non recourse to protect them against potential bad debts. However, in the current economic climate many providers are struggling to provide the credit limits that would be needed to give sufficient cover that the non recourse option is viable for the client.

We were recently in contact with a medium sized recuritment company that had seen the credit limit for their major debtor reduce by half which not only meant they were not fully covered if the customer failed by their funding was also restricted as the bank owned factoring company would only fund against debts that were covered by a non recourse credit limit.  In addition the level of credit cover provided against the rest of their sales ledger was also restricted.

The level of credit cover provided overall meant that the non recourse element of the facility was no longer cost effective for our client so we arranged for them to move to a recourse facility (without bad debt protection) which saved them the cost of the bad debt protection premium and released additional funding as the level of funding provided was no longer linked to their credit limits.