What does “Recourse Period” mean in Invoice finance & Factoring?
Most invoice finance/factoring facilities have what is called a Recourse Period. This is usually the maximum period that an invoice will be funded for.
Once this period is passed you may be required to pay a refactoring fee or if its a bad debt, repay the borrowing.
A typical recourse period would be around 90 – 120 days.
Recourse Period Example
If your Recourse Period is 90 days, then any funded invoices need paying by your client within that period.
Recourse Period: 90 Days
Credit Terms: 60 Days
In this example if your customer pays more than 30 days late, you could be liable for an additional refactoring fee.
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