Recourse factoring leaves the risk of customer non-payment with you. If the your customer is unable to make payment, the factor has recourse against the your assets for that money. This is the opposite of Non-Recourse Factoring where the risk lies with the factor.

In a situation with recourse factoring, where your client is not making payment, you must buy the unpaid invoice or possibly swap the non-payment invoice with another receivable of equal or greater value.

An advantage of recourse factoring is that because the risk to the factor is limited, the fees are much lower than with non-recourse factoring. If you are confident with your clients ability to repay their invoices, then assuming the risk of non payment may not be a primary concern for you and recourse factoring will offer you the lower fees.

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