Recourse vs Non-Recourse Factoring

What’s the Difference Between Recourse and Non-Recourse Factoring?

Factoring is a great way to get cash fast to keep your business running. Some factoring companies offer recourse and non-recourse factoring plans. But do you know the difference between them? Find out how each factoring plan impacts your business if your customer doesn’t pay.

What is Recourse Factoring?

Recourse factoring is the most common type of invoice factoring. If a factoring company can’t collect from your customer for any reason, you’ll need to cover the cost of the invoice. Even if your customer goes out of business, files bankruptcy, or if there’s a dispute or claim, you still have to buy back the unpaid invoice.

What is Non-Recourse Factoring?

Non-recourse factoring is when the factoring company covers the cost of the invoice if your customer doesn’t pay for credit reasons. Under this plan, the factoring company will take the hit if there’s a problem with payment.

Recourse vs. Non-Recourse Factoring

Picking the right plan for your business depends on who you’re hauling for and how quick your customers pay. When you talk to Apex, we can look at a list of your customers to find the plan that works best for you. We always recommend checking credit on the companies you want to do business with, which we’ll more about later.

Rates can vary between recourse and non-recourse factoring plans too, so ask us all of your questions. We’re happy to help. You need to get as much information as possible in order to pick the right plan.

Protect yourself with credit checks

Whether you chose recourse or non-recourse factoring, you can protect your business by running credit checks on the companies you haul for. This helps you avoid getting stuck with unpaid invoices from brokers and shippers who might be slow to pay. To make sure you’re hauling for the right customers, it’s important to do your homework and run a credit check. Apex offers our clients free, unlimited credit checks and gives you detailed credit information, so you know exactly how much a broker or shipper is approved for. No smiley faces or stop signs here!

Apex even manages the collections process. We build strong relationships with you and your customers, so we can stay on top of your account and make sure you’re getting paid faster. No matter what plan you choose, factoring can be a great way for you to get cash fast.

Call or email us today to learn more about how our factoring programs can help you keep more of your money in your company where it belongs. Call 1-855-369-APEX or get started here.