What is factoring without recourse?
Factoring without recourse means that the risk of accounts receivable being uncollectible transfers from the buyer to the seller. Basically, if an accounts receivable cannot be collected, the seller does not have to reimburse the buyer like they would if the factoring was “with recourse”.
To account for this risk, the factor (buyer) would likely be able to obtain the rights to the receivables at a lower price than if the factor was with recourse.
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