Recourse

If a customer does not pay, the business may have to buy the invoice back or replace it.

Why it matters

Under recourse factoring, the business retains credit risk. An unpaid invoice beyond the recourse period can result in repurchase obligations, reducing available cash.

Related terms

Related article: What is invoice factoring?

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.