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What's the difference between factoring with recourse and factoring without recourse?


There are two types of invoice factoring to choose from; recourse factoring and factoring without recourse. With a recourse contract, any unpaid invoices (where the debt cannot be recovered) must be paid back to the factor. However, in a non-recourse agreement, the factoring company takes on any unpaid debts (and claims any losses back through their own insurance). Because your business carries the risk of unpaid invoices in a recourse contract, you will take a higher percentage of each invoice sold. With a non-recourse contract you can expect a smaller return on each invoice, but you will benefit from the security it offers.

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  • Why turn to a factor rather than seek a bank loan?
  • How does a factoring finance arrangement work?
  • Who collects the debt due, the factor or my business?
  • Does factoring require a minimum number of invoices?
  • What does a factoring company do in the case of nonpayment?
  • Do my customers know of the factor’s involvement?
  • What are the requirements for invoice discounting?
  • Is there any collateral requirement for factoring?
  • How quickly can I access cash for the invoices I sell to a factor?
  • Who do I turn to if I have a dispute with my factoring company?
  • I have overseas clients; can I factor international invoices?
  • Is it easy to terminate a factoring arrangement?
  • What regulations apply to factoring companies?
  • What does working capital mean to your business?
  • What is the difference between factoring and bill discounting?
  • What is credit insurance?
  • What is export factoring?
  • What is the difference between invoice factoring and merchant cash advance?
  • What is the difference between factoring and securitisation?