Recourse Factoring is the most common of the strategies offered by factoring companies. Recourse Factoring typically offers the least amount of risk to the factoring company and in return has the lowest discount rate to you.
Recourse Factoring is low risk is to the Factoring Company due to the fact that the risk associated with the payment of the invoice remains with the seller (you). If, due to unforeseen complications the invoice is not paid by your customer within 90 days you becomes responsible for full payment of the invoice. Recourse Factoring is generally used if the seller is confident in their customers above average credit and repayment history (usually 30-60 days). Although the low rate is enticing to the seller they must decide if they wish to retain risk of non-payment .
