What is non-recourse factoring?
Factoring is selling your accounts receivable invoices to a factoring company at a discount in exchange for immediate cash. Non-Recourse factoring comes with a higher factoring cost and stricter credit underwriting compared to Recourse Factoring, because the factoring company takes all the credit risk.
Like all factoring products, this form of invoice financing is based on you doing business with creditworthy customers and their ability to pay invoices in a timely manner. The difference with non-recourse factoring is that the factoring company purchases your invoice and absorbs the credit risk associated with the invoice. If your customer doesn't pay, the factoring company absorbs the cost.