Do I Use Recourse or Non-Recourse Factoring?
Choosing Recourse and Non-Recourse factoring depends on the relationship a trucking company has with its customers.
Recourse Factoring places the responsibility on trucking companies to buy back invoices or exchange them for another of comparable value if the customer does not pay for the delivered load within 90 days. The benefit of this type of factoring is that it has lower fees associated with it.
Non-Recourse Factoring places the responsibility on the factoring company to absorb the financial loss if a trucking company's customer does not pay for a delievered load; however, this only happens if the customer cannot pay due to bankruptcy. This circumstance is rare given a customer's inabiltiy to pay is usually the result of a dispute or financial difficulty. In either case, the factoring company will try to secure payment of the delievered load. In addition, this type of factoring has higher fees associated with it due to the risk the factoring company faces.
Learn more about about recourse factoring vs. non-recourse factoring.