Factoring

Recourse or non recourse

Recourse or non recourse refers to the factor right to get the client to repay advance made in the event of debtor failure.

 

Recourse

In a recourse factoring arrangement, the factor will have the right to recover the advance or prepayment made to the client in the event that the debtor failure.

Non recourse

In a non recourse factoring arrangement, the factor does not have the right to recover the advance or prepayment made to the client in the event of debtor failure due to financial difficulties.

Note that the factor has no recourse only in the event of debtor's financial difficulty. It does not cover dispute or credit note.

Should there be a dispute, credit note or counter claim by the debtor the factor will have recourse to the client.