The main difference between recourse and non-recourse invoice factoring is the extent of liability that the factor takes on when providing financing. With recourse factoring, the factor assumes full responsibility for any uncollectible invoices, meaning that if a customer fails to pay an invoice, the factor can come back to the business in order to make up for the loss. On the other hand, with non-recourse factoring, if a customer fails to pay their invoice then it is solely the responsibility of the business; no collection attempts will be made by the factor. Recourse factoring also typically involves more flexible terms than non-recourse; businesses often get paid quicker and may even receive higher advances on their invoices. This can make recourse factoring more beneficial for businesses that want quick access to cash but need a little extra protection in case an invoice isn’t paid.

Non-recourse factoring is typically the more expensive option, but it offers greater protection to businesses that don’t have the resources to manage collections activities. With non-recourse factoring, the business retains all responsibility for collecting payment from customers and will not be able to recover any lost funds from the factor if an invoice is not paid. Whether you choose recourse or non-recourse invoicing depends on your individual needs and circumstances; it’s important to consider both options before making a decision. Both types of factoring can provide businesses with the funds they need to pay vendors, invest in new equipment and manage their cash flow. Ultimately, it’s important to find a factor that works with your business and provides terms that best suit your needs.