2 min read
Definition
Recourse factoring is invoice factoring in which, if a factored customer does not pay, the factor can reclaim the advance from you. The credit risk on the debtor stays with your business.
In plain terms
You get cash early, but if your customer defaults you must repay what was advanced. It is cheaper precisely because the factor is not taking the bad-debt risk.
Why it matters for your company
Recourse factoring suits businesses confident in their debtors’ reliability. If you want the risk removed, non-recourse or credit insurance transfers it — at a price. See non-recourse finance.
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