Recourse Factoring

Recourse factoring requires the client to buy back any invoices that they have sold to a factoring company but remain unpaid. If this occurs, the client will either be charged the invoice, or they can replace it with a separate good, unfunded invoice. Recourse factoring protects the factoring company from bad debt, but it can also be a more affordable factoring solution for small businesses.

This form of factoring differs from non-recourse factoring, where the factoring company assumes the risk for unpaid customer invoices.

Related terms "R"