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Hi,
Please, can you explain to me the difference between course and recourse basis?
thank you.
On a recourse basis, the company retains the risk of bad debts.
If the customer fails to pay, the company must buy back the unpaid invoices from the factor, meaning they still suffer from any irrecoverable debts.On non-recourse basis means that the factor assumes the risk of bad debts. If the customer does not pay, the factor cannot claim the amount from the company, allowing the company to save on all current irrecoverable debts. Thus, non-recourse factoring provides more protection to the company against bad debts.
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