Factoring through a Non-Recourse Product constitutes a higher risk to the factoring company. As with all factored invoices with factoring companies the purchase is based on your customers' credit and their ability to pay invoices in a timely matter. The difference is that the factoring company purchases invoices and absorbs the credit risk associated with the invoice.
That is to say if your customer does not pay the invoice for any credit reason the factoring company absorbs the loss. This creates a higher risk for the factoring company and as such a discount rate is charged along with higher rate is charges along with stricter adherence to credit underwriting of your customer.
