Factoring companies: which are good? What to look out for?

I've heard people on this forum talk about the insurance that is required on a nonrecourse factered invoice for factoring companies. Can you tell me what that is? is it required?

 

I'm not sure what that is? We do have to approve brokers before factoring bills, but we don't require any type of insurance and our approval requirements are lower than most others. But who knows about some of these others?

 

They might very well but that would assume they have millions on hand. They may very well do that too! I was looking for an answer to how little they could earn and still stay solvent. Money costs money. You can play on Google for hours on end and can see how much banks borrow and for how much. It's all public information if the bank is a publically held entity. In any case, staying in business at 4% margin is impossible.

 

I mean do factoring companies have to buy insurance for a nonrecourse invoice?
And do you know how much the cost to borrow for a factoring company is?

 

No the brokers carry bonds, which is like their insurance. If we cannot collect on payments, or they go out of business. We file on their bond and their insurance pays us if the bond filing doesn't motivate them to pay first. But no, at least our company doesn't purchase insurance for non recourse. These bonds have recently been updated to a 75K minimum this Oct as well.

 

But....but.....I thought you said "no recourse"?????????

 

Non recourse on the carrier?? We collect from the broker in place of the carrier??

 

A little background on why I'm asking this question - doing research on my thesis. If you can tell me, do you have any idea how often brokers you work with go out of business and you dont get the money from their surety bonds? Maybe a percentage of invoices that you dont get the money back on?

 

I'm not sure on that one, I'm not in the collections department that handles that aspect.

 

Do you know how i could find out without sounding too much like a snoop?