In recourse factoring, if a broker or shipper never pays an invoice, the factoring company can require the carrier to buy back that unpaid invoice or offset it against future funding. In non-recourse factoring, the factor generally absorbs the loss if the customer becomes insolvent and doesn’t pay — though non-recourse agreements usually still carry exceptions (such as disputes over the freight itself, short-pays, or claims) where the carrier can still be liable.
Non-recourse factoring is typically priced higher than recourse factoring because the factor is taking on more credit risk. When comparing providers, it matters less which one is labeled “non-recourse” and more what the actual exceptions and carve-outs are in the contract.
Always read the specific recourse/non-recourse language in a factoring agreement rather than relying on the label alone.
This article is general educational information, not legal, financial, tax, or insurance advice. Confirm current requirements with the applicable government agency or a qualified professional before acting.