Definition
Factoring where the business must buy back invoices that customers don't pay.
Why it matters
It's cheaper than non-recourse.
Where it shows up in a deal
Recourse is the default structure in most agreements, expressed as a repurchase obligation: if an invoice is still unpaid after an agreed number of days, you buy it back. In practice the factor does not ask you to write a check - it recovers the advance and accrued fees from your reserve or nets them against your next funding.
What it affects
- Recovery lands on your reserve, so a thin reserve turns a chargeback into an immediate cash shock.
- The repurchase clock usually runs from the invoice date, not from the funding date.
- Because you keep the credit risk, pricing is lower and buyer credit limits are more flexible.
- The repurchased invoice comes back to you, and you keep the right to collect it.
A worked example
A $40,000 invoice advanced at 90% ($36,000) is unpaid at 90 days. At 1.5% per 30 days, three periods of fees have accrued: 4.5% of $40,000 = $1,800. The factor recovers $37,800 from your reserve or your next funding and reassigns the invoice to you.
The common mistake
Related terms
- Non-Recourse FactoringFactoring where the factor absorbs losses if an approved customer becomes insolvent.
- Recourse PeriodThe number of days after which an unpaid invoice must be bought back in recourse factoring.
- ChargebackA deduction a customer, often a retailer, takes from an invoice payment.
- ReserveThe portion of an invoice held back by a factor until the customer pays.
Questions about how full-recourse factoring affects your facility?
Call (929) 658-8087 or request a written quote — no obligation, no credit impact.
