Glossary
What is Recourse Factoring?
Recourse factoring is an invoice factoring arrangement in which your business remains responsible if a customer does not pay a factored invoice. If the invoice goes unpaid past an agreed period, you typically must buy it back or replace it with another eligible invoice. Because the factor takes on less risk, recourse factoring is generally less expensive than non-recourse factoring and is the more common structure. It works best when your customers have reliable payment histories.
Example
When a customer fails to pay within 90 days, the business replaces the unpaid invoice with a new one under its recourse agreement.
Related funding
Invoice Factoring: Turn slow-paying invoices into cash now.
Related terms
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