What is recourse vs non-recourse?
Recourse vs Non-Recourse: Who eats the loss if a customer never pays: you (recourse) or the factor (non-recourse).
How it works
In a recourse arrangement, you must buy back or replace any invoice a customer fails to pay. In a non-recourse arrangement, the factor absorbs credit losses on approved accounts—typically limited to customer insolvency, not disputes. Non-recourse costs slightly more but shifts credit risk off your balance sheet.
Where you will run into it
Recourse vs Non-Recourse comes up most often in invoice factoring conversations. See how invoice factoring works, including real cost ranges and timelines.
Related terms
Recourse vs Non-Recourse questions
Who eats the loss if a customer never pays: you (recourse) or the factor (non-recourse).
In a recourse arrangement, you must buy back or replace any invoice a customer fails to pay. In a non-recourse arrangement, the factor absorbs credit losses on approved accounts—typically limited to customer insolvency, not disputes. Non-recourse costs slightly more but shifts credit risk off your balance sheet.
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