Accounts Receivable Financing:
Recourse financing – lender accepts assignment of the accounts receivables and does not assume the credit risk. Borrower is responsible for managing the accounts receivables. Lender will finance invoices up to 90 days from date sold and then will charge them back to borrower.
Non-recourse factoring – lender purchases the accounts receivables and assumes the risk of the customer’s credit and payment. The factor will guarantee against credit loss and will check credit, make collections, and manage the accounting.