Factoring can be on either:

•    a ‘recourse’ basis, where in the event a customer does not pay, the lender can recover the funds they have advanced to you from your current availability, leaving you exposed to the impact of the bad debt; or

•    a ‘non-recourse’ basis where if a customer fails to pay a debt which is covered by the credit limit advised by the lender and where there are no grounds for dispute, this is the factor’s problem not yours.