Updated · LoanHelp editorial team · Editorial policy · Not financial advice
Recourse factoring leaves you responsible if a customer does not pay. Non-recourse factoring shifts insolvency risk to the factor but usually excludes disputes and short-pays — read the contract definitions, not the marketing label.
Illustrative example
Illustrative example — not a quote.
On a $50,000 invoice, an advance of $42,500 (Illustrative advance rate (85 cents on the dollar)) minus a $1,250 fee leaves $41,250 in the business bank account before the customer pays. If the customer never pays and the deal is recourse, you may owe the factor the unpaid balance.
Notice of assignment
Factors notify your customers where to send payment. Rules for account debtors appear in UCC § 9-406. Your factor supplies the form — do not treat this page as a legal template.
Staffing payroll funding · Exit a factoring contract
Common questions
- What is recourse factoring?
- If your customer does not pay an approved invoice within the agreed window, you buy the invoice back or replace it. The factor’s advance is not final until the customer pays.
- What is non-recourse factoring?
- The factor accepts credit risk on approved customers — usually limited to customer insolvency or bankruptcy, not disputes over quality or short-pay. Read the definition in your agreement; marketing labels vary.
- What is a notice of assignment?
- It tells your customer to remit payment to the factor. UCC § 9-406 governs how account debtors are notified. Your factor provides the form; do not treat our description as a legal template.
- Does LoanHelp factor invoices?
- No. LoanHelp explains options and shares one financing inquiry with one partner. Factors and lenders set recourse terms.
LoanHelp is an independent commercial financing referral service, not a lender or broker. We share one financing inquiry with one partner, who may contact you about options. We do not approve, arrange, or guarantee financing.
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