Repurchase

When a seller is required to buy back an invoice from the factor.

Why it matters

Repurchase requires cash or a replacement invoice when an invoice cannot be collected within the recourse period. A large chargeback can strain cash flow, since the seller must return the advance amount plus any fees already paid. In programs with multiple repurchase options—cash, replacement invoice, or reserve deduction—the seller typically has some control over how the obligation is satisfied. Understanding which option is available and under what conditions helps sellers plan for chargeback events rather than being surprised by immediate cash demands.

How it appears in contracts

Repurchase obligations appear in the Recourse or Chargeback section of the factoring agreement. After the recourse period expires without payment, or after a dispute is confirmed, the factor issues a chargeback notice demanding repurchase. The agreement specifies the form of repurchase: cash payment within a defined number of days, a replacement eligible invoice, or deduction from available reserve. Some agreements require cash repurchase only if the reserve is insufficient to cover the chargeback amount. Sellers should confirm the repurchase timeline in the agreement to avoid unexpected default under the payment terms.

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.