Is there any collateral requirement for factoring?

As with all financial services, some criteria do need to be met in order to ensure that the factoring contract will be beneficial and sustainable. Invoice factoring is a form of lending , and as such, you may need to provide collateral to guarantee repayment of a cash advance, if the debt cannot be collected on an invoice. However, this may only be required if you are trading with customers with a bad credit history and normally only with recourse factoring agreements (where any bad debt remains the responsibility of your business), so it is certainly not a guaranteed prerequisite. Make sure you check your offer terms and contract thoroughly for any collateral requirements.

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