Definition
The number of days after which an unpaid invoice must be bought back in recourse factoring.
Why it matters
Commonly 60 to 90 days.
Where it shows up in a deal
The recourse period is defined in the factoring agreement, commonly 60 to 90 days, and it is measured from a stated starting point - usually the invoice date. When it expires on an unpaid invoice, the repurchase obligation is triggered and the factor recovers the advance plus accrued fees from your reserve or your next funding.
What it affects
- The clock normally starts at the invoice date, so slow submission eats your own buffer.
- Invoices approaching the end of the period are where collections effort should concentrate.
- Some agreements let the factor extend the period case by case; that discretion is worth asking about.
- A short recourse period paired with slow-paying customers produces chargebacks on invoices that would have paid.
A worked example
On a 90-day recourse period measured from the invoice date, an invoice dated March 1 and submitted on March 20 must be collected by May 30. Nineteen days of the window were spent before the invoice was ever funded.
The common mistake
Related terms
- Full-Recourse FactoringFactoring where the business must buy back invoices that customers don't pay.
- ChargebackA deduction a customer, often a retailer, takes from an invoice payment.
- Aging ReportA report that groups unpaid invoices by how long they've been outstanding.
- InvoiceA bill requesting payment for goods or services delivered.
Questions about how recourse period affects your facility?
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