With non-recourse factoring, the risk of non-payment by your customers lies with the factor. If the client’s customer doesn't pay, the factor generally does not have recourse against the client for payment of the invoice.

Because of the bad debt protection it offers, non-recourse factoring tends to be more costly than recourse factoring, but the value is determined by your opinion on carrying that risk.

With non-recourse factoring you do not have to refund the advance to the factor, but you are typically required to pay interest to the factor for a specified time frame. Lastly, with non-recourse factoring, the factor takes over all of your rights to pursue payment by that client.

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