Factoring without recourse, a strategic solution for companies

What is factoring without recourse?

Factoring without recourse is a financial solution whereby the advance made by the factor is considered as irrevocable payment for customers invoiced by the company. Unlike conventional factoring, this deconsolidating approach has the effect of minimising the weight of trade receivables on the balance sheet. This mechanism is based on the fact that the factor has no recourse against the company in the event of customer default.

The main objective of this solution is twofold: optimise the financial management of trade receivables while improving the company's financial ratios and enabling better presentation of financial statements. As a result, the company can meet investor requirements, comply with bank covenants and improve its financial rating.

Why opt for factoring without recourse?

Why does factoring enable accounting deconsolidation?

For assigned receivables to be removed from the balance sheet, several criteria must be met:

• The effective transfer of risk: the factor assumes the entire credit risk. Thus, the assigning company is released from any obligation in the event of non-payment of invoices financed by the factor.
• Compliance with accounting standards: under IFRS, a factoring without recourse transaction is validated when the company demonstrates that it neither retains nor controls the risks associated with the receivables.
• The difference with simple financing: unlike a loan or cash advance, factoring without recourse is based on a definitive transfer of ownership of the receivables, which justifies their removal from the balance sheet.

In practice, this type of financing requires validation by the auditors and specific contract structuring to meet regulatory requirements.

Factoring and deconsolidation: what impact on the balance sheet ?

Factoring without recourse radically changes a company's financial structure. By removing receivables from the balance sheet, it immediately improves the debt-to-equity ratio. This facilitates access to new credit lines. It also reduces working capital requirements, optimising cash management. Finally, it offers a more attractive presentation of financial statements, a major asset in attracting investors and financial partners.

Depending on the contractual terms, this solution enables the company to better structure its financing while retaining increased investment capacity.

Which companies can benefit from factoring without recourse?

Factoring without recourse is primarily aimed at SMEs, large companies and multinationals with a substantial volume of receivables. It is particularly suited to companies seeking to optimise their balance sheet in anticipation of a financial operation (fundraising, IPO, acquisition, etc.) or wishing to secure their cash flow while reducing their apparent indebtedness. Factoring without recourse also works for companies subject to strict IFRS accounting standards, which require precise receivables treatment.

Also, although long reserved for listed companies and large groups, this solution is increasingly accessible to SMEs with large volumes of receivables, particularly in sectors such as industry, international trade or services.

Comparison with other financial solutions

Factoring without recourse differs from conventional factoring and other forms of financing in its ability to directly improve a company's balance sheet structure.

Thus, unlike a simple bank loan or factoring with recourse, factoring without recourse enables the company to finance its development while preserving its financial indicators.

Our approach: tailor-made expertise in factoring without recourse

At AU Group, we help companies implement factoring without recourse solutions tailored to their financial and accounting challenges. Drawing on our expertise in receivables management, financing and assignment of receivables, we offer a personalized service to each company, taking into account its cash flow requirements, financial ratios and debt levels.

An in-depth needs analysis

Each company has its own specific requirements when it comes to factoring without recourse. That's why we carry out a detailed study of trade receivables, current contracts and applicable accounting standards (IFRS, French GAAP, US GAAP...). This approach enables us to structure an optimised factoring without recourse scheme, guaranteeing a transfer of receivables with no negative impact on financial accounts.

Rigorous selection of factors and credit insurers

We work with all the factors and credit insurers on the market. This enables us to negotiate the best financing and receivables assignment terms. Our aim is to set up non-recourse transactions for our customers that meet the expectations of the statutory auditors.

Safe, compliant implementation

Implementing a factoring without recourse contract requires real expertise. That's why we support our customers throughout the process, from negotiation with the factors to drafting the contract and its validation by the company's auditors. Once the contract is in place, AU Group teams continue to support companies to ensure compliance with the conditions that have been previously negotiated.

Digital tools for proactive management

We provide our customers with innovative technological solutions to track the financing of receivables assigned to the factor, and optimise companies' cash flow. These tools enable efficient management of trade receivables, guaranteeing clear reporting and up-to-date vision of amounts assigned and financed.

An international approach

AU Group is able to support international companies operating in various countries, in Europe and beyond.

By choosing AU Group, you benefit from a trusted partner to structure and secure your factoring without recourse while optimising your financial ratios and cash flow.