Non-Recourse Factoring
Invoice factoring where the factoring company absorbs the loss if a customer fails to pay due to insolvency, rather than the business having to repay the advance.
Non-recourse factoring shifts credit risk to the factoring company, which is why it typically comes with higher fees and often more selective underwriting of which customer invoices qualify, since the factor is directly exposed if a customer doesn’t pay.
Non-recourse protection usually only applies to non-payment due to customer insolvency or bankruptcy, not to disputes over the underlying goods or services, so reading the specific terms of what’s actually covered matters.
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