Non-recourse

If the customer fails to pay due to a credit event, the factor absorbs the loss—but exclusions in the contract may limit coverage.

Why it matters

Non-recourse transfers credit risk for defined events, but exclusions in the contract such as disputes, dilution, fraud, or debtor objections can shift risk back to the seller.

Related terms

Related article: What is invoice factoring?

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.