Non-Recourse Debt Factoring
Debt Factoring is the sale of
accounts receivables from an operating business to a
specialized finance company known as a factor. This is
performed at a discount and subsequently the factor must
collect receivables from the customers directly.
Factoring agreements come in two forms. They can either be
factoring agreements or non-recourse factoring
Non-recourse debt factoring means that the factor
assumes the risk of any uncollectible receivables or bad debts.
In other words, he has no recourse against the business who
sold the receivables.
Non-recourse factoring carries a higher discount that
recourse factoring to including the bad debt risk that is being
assumed by the factor.