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Factoring with recourse is when a business sells its accounts receivable to a factoring company. In this type of arrangement, your business will retain the responsibility for the payment of the invoices should your customers fail to pay the factoring company.

While there’s more risk to be assumed by your business, working with a recourse factoring company is often less expensive for businesses.

In recourse factoring, you must buy back any invoices that the factoring company is unable to collect payment on. In non-recourse factoring, the factoring company assumes most of the risk—including non-payment—by your customers.

However, there are still stipulations associated with non-recourse factoring, depending on the agreement you sign with the factoring company.

Imagine your business provides a service for companies A, B, and C. After collecting invoices for those transactions, you sell them to a factoring company (REV Capital). REV Capital then collects from Company A and Company B, but is unable to secure payment from Company C. As such, you’d then be asked to buy back that uncollectible invoice.

Recourse factoring companies like REV Capital ensure speedy transactions to get your funds to you without unnecessary delays.

Generally, you will pay a flat fee ranging from 1% to 5% of the invoice value. The exact value will depend on the recourse factoring company’s pre-agreement risk assessment. Recourse accounts receivable factoring usually has lower fees.

Generally, we only factor in U.S. and Canadian currencies, but sometimes we make exceptions! Contact the REV Capital team for more information.

In a recourse factoring agreement, you are ultimately responsible for a customer's non-payment. This comes with the trade-off of lower fees, making it a great choice for businesses whose clients have solid payment histories. However, it may therefore be less desirable for those whose customers have poor payment histories.