Also known as full-recourse factoring or simply recourse factoring, factoring with recourse means that the client assumes most or all risk associated with non-payment by the customer. If a factored debt proves to be uncollectible, the full amount of the debt is typically subtracted from the reserve (and, if the reserve is insufficient then the client becomes liable for the unsatisfied amount of the debt). Because there is less risk to the factor involved, factoring fees are usually lower and the advance rate higher than factoring without recourse. Because there is less risk to the factor involved, factoring fees are usually lower than factoring with recourse. See also Advance Rate, Charge Back and Factoring without Recourse.
2 Responses to “Factoring with Recourse”
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[...] the likelihood of collecting the receivable, the lower the advance rate that is provided. Also see Full With Recourse and Factoring without Recourse. [...]
[...] disposition of all factored accounts receivable. If a debt proves uncollectable, particularly with full recourse factoring, the amount of the debt is first subtracted from the reserve. [...]