What is A Recourse Period?

In the context of accounts receivable factoring, the “recourse period” refers to a specific duration during which the factor (the entity providing the financing) can seek repayment from the seller (the business selling its receivables) in case the customer fails to pay the invoice. Typically, during the recourse period, if the customer does not pay the invoice, the factor can “recourse” or return the unpaid invoice back to the seller, who then becomes responsible for repaying the factor. The length of the recourse period can vary depending on the terms of the factoring agreement and can have implications for the risk and cost associated with the factoring arrangement.

  • Factor

    A factor is an intermediary that offers companies immediate cash or financing by buying their accounts receivables. Essentially, a factor is a financial entity that agrees to provide the company with the value of an invoice, deducting a certain amount…

  • Factoring

    Invoice Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to…

  • Factoring Advance

    A cash advance to a Client (usually by wire transfer or ACH) for 80-90% of the value of the purchased and verified Invoice. Our goal at ECapital is to verify and fund the same day as invoice receipt (if before…

  • Factoring Company

    A factoring company is a financial institution which buys the accounts receivables of your businesses. The factor can buy your invoices taking the credit risk on a non-recourse basis. A factoring company can also offer you other services including risk…

  • Factoring Discount Fee or Factoring Rate

    The Factoring Discount Fee or Factoring Rate is the cost to you for Invoice Factoring, A/R Management, and Credit Protection from eCapital. It is typically based on your monthly volume and creditworthiness of your Customers (the Account Debtors) and can…

  • Factoring Line of Credit

    Factoring Line of Credit is an alternative financing option that's unique to eCapital. Acting much the same as a business line of credit, it provides access to funds as needed with fees paid only on funds drawn plus a small…

  • Factoring Master Agreement (FMA)

    A Factoring Master Agreement is a legal contract between a business (the client) and a factoring company (the factor). Factoring is a financial transaction where a business sells its accounts receivable (invoices) to a third party (the factor) at a…

  • Factoring Receivables

    Factoring Receivables is a type of financing where a business will sell its good invoices to a factoring company. Invoices can be sold on a recourse or non-recourse basis. Factoring Receivables is not bad debt collection.

  • Factoring Reserve

    The first payment to your company, the Factoring Advance, is typically 80-90% of the invoice value and is made once the invoice is received and verified. As stated above, our goal at ECapital is to verify and fund the same…

  • Bulk Factoring

    Bulk factoring is a financing arrangement in which a factoring company purchases a large number of a business's outstanding invoices at once. The factoring company provides immediate payment for the invoices, typically providing a percentage of the total value of…

  • Accounts Receivable Factoring

    Also known as A/R factoring, factoring or general factoring. Factoring designed specifically for trucking companies is referred to as freight factoring.

  • Export Factoring

    A specialized variant of invoice factoring, export factoring, caters specifically to businesses that sell goods internationally. It offers non-recourse funding, meaning the business gets paid upon shipment without the risk of non-payment by the overseas buyer. The solvency of the…

  • Federal Acquisition Regulations (FAR)

    The Federal Acquisition Regulations (FAR) is a substantial and complex set of rules defining the federal government's purchasing process with suppliers. Selling to the government can be a great way to grow your small business, but it can be intimidating.…

  • Freight Factoring

    Freight factoring, also known as transport factoring, trucking/truck factoring, and freight bill factoring takes invoices and turns them into cash. Instead of waiting for 30, 60, or 90 days to be paid, freight factoring unlocks money already earned, so you…

  • Invoice Factoring

    Invoice Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to…

  • MCA Factor Rate

    The factor rate multiplied by the advance amount equals your total loan obligation to the Merchant Cash Advance provider. For example, if your MCA loan amount is $50,000 and your factor rate is 1.2, your total payback amount will be…

  • Non-Recourse Factoring or Without Recourse Factoring

    Non-Recourse Factoring or Factoring Without Recourse is an agreement within a factoring contract where the factor's client does not have to pay back the factoring company if an invoice is not specifically paid due to bankruptcy of the client’s customer…

  • Process of Factoring

    The Process of Factoring is: Complete the factoring application and submit with the required documents (A/R aging, sample invoices, Vendor Agreements & Purchase Orders) Receive a written proposal outlining the terms and rates from the Factoring company Sign the proposal…

  • Reverse Factoring

    Reverse factoring, also known as supplier finance or confirmed payables financing, is a financial arrangement that allows suppliers to receive early payment on their invoices at a discount, with the process initiated by the buyer rather than the supplier. It's…

No Posts Found