What is offshore factoring? How does it work? Find out how to reduce business taxes by up to 70%

What if there was a way to virtually CONTROL how much you pay in taxes each year … WITHOUT spending money on things you don’t need?

Non-recourse factoring is one of the most powerful yet simplistic strategies you can implement to obtain tax savings and asset protection for your small and medium-sized business that rivals that of large multinational corporations.

What is “Non-recourse Factoring”?

Well, factoring is a commonly employed business solution for a company that needs short-term liquidity or would like to accelerate its cash flow. Factoring involves a company that has extended credit, often in the form of supplier financing to customers, by selling these accounts receivable for cash.

Due to the time before collection of outstanding debts can be finalized and the uncertainty of collecting accounts receivable, the company’s a / r will be discounted by some “factor.” Depending on credit history, industry, collection time, etc., discounts on accounts receivable can range from 10% to more than half of potential accounts receivable.

“Non-recourse” means that the buyer of the receivable cannot attempt to collect from the original owner of the receivable if the debt becomes bad in the future.

Here’s how “non-recourse factoring” can virtually eliminate your tax bill

To illustrate the details of how this works and what it can do for you, I will use a hypothetical case study with a fictional character named Dr. Benedict.

Dr. Benedict runs his own private practice. You are concerned that your assets are in jeopardy from unnecessary lawsuits. Many of your friends have gone out of business because they are concerned about the price of negligence insurance … but you hate seeing your job go to waste and you don’t want to leave the job you love.

What does Dr. Benedict do?

1) Establish an offshore structure.

2) Transfer some after-tax funds to offshore structure. The offshore structure will take on the role of ‘factor’.

3) Sell your accounts receivable to the offshore structure at a discounted price. Non-recourse factoring (where the factor assumes the risks that its clients will not pay) discounts are dependent on the market rate, but in many places they can be as high as 70%. So, let’s say the Doctor sells his accounts receivable to his offshore structure for 30% of their value.

4) Then ONLY the country’s tax on that 30%. The rest is collected by the tax-free offshore structure.

5) The doctor’s practice continues to collect payments from accounts receivable and remits them to the offshore factor.

Not only are you reducing your tax bill to a shell than it was before, but you are also protecting the tax-free money you have earned. If at any point a patient takes you to court or faces financial difficulties, that reserve of savings abroad will be incredibly difficult to attack. The cash saved can simply stay abroad accruing interest or be invested elsewhere, tax-free.

The most complex part of this deal is setting up the offshore structure, but there are people available who can help you with that and guide you through the entire process.