{"id":11760,"date":"2020-03-10T23:02:07","date_gmt":"2020-03-10T23:02:07","guid":{"rendered":"https:\/\/liquidcapitalcorp.com\/?p=11760"},"modified":"2026-07-22T14:13:52","modified_gmt":"2026-07-22T14:13:52","slug":"what-is-recourse-invoice-factoring","status":"publish","type":"post","link":"https:\/\/liquidcapitalcorp.com\/es\/blog\/what-is-recourse-invoice-factoring\/","title":{"rendered":"What is recourse invoice factoring?"},"content":{"rendered":"

Learn about the benefits of recourse invoice factoring and how it can offer you even more immediate working capital.<\/em><\/p>\n

\"Recourse<\/p>\n

For small and medium-sized businesses, there are many benefits to factoring your invoices. Instantly increasing your cash flow is, of course, the number one reason. But you can also benefit from <\/span>outsourcing your back office support<\/span><\/a>, letting your factoring partner handle collections on your accounts receivable. Freeing up much of your time, you\u2019ll be able to work on other parts of your business.<\/span><\/p>\n

There are a couple of different types of invoice factoring, and \u201crecourse factoring\u201d is the most common. So what is recourse factoring, and why should a business understand how it works?<\/span><\/p>\n

How recourse factoring works<\/b><\/h2>\n

In <\/span>recourse factoring<\/span><\/a>, a funding partner (aka your lender or the \u201cfactor\u201d) buys invoices from you with the agreement that you will buy the invoice back if your customer is unwilling or unable to pay for the invoice when it becomes due. In this way, you share the risk of non-payment with the funding partner.<\/span><\/p>\n

There is a major advantage for you in recourse factoring. This shared risk allows your lender to <\/span>advance a larger upfront percentage of the invoice<\/span><\/i>. Typically in a recourse factoring arrangement, you can receive between 80 and 90% of the invoice upfront, minus the initial fee.\u00a0<\/span><\/p>\n

And once the factoring partner receives payment for the invoice from your end customer, you\u2019ll also receive a reserve payment<\/a>.<\/span><\/p>\n

Conversely, in non-recourse factoring you won\u2019t have to share the risk, but you\u2019ll receive <\/span>less<\/span> working capital than with recourse factoring. In fact, you may receive less than 75% of the face value of the invoice \u2014\u00a0 plus, you will <\/span>not<\/span> receive any reserves or holdback once the invoice is paid to the factoring partner. To a business in need of more working capital, this can be a severe disadvantage.\u00a0\u00a0<\/span><\/p>\n

The benefits of recourse factoring<\/b><\/h2>\n