Recourse in factoring is a risk mitigation measure. In factoring with recourse, both the company to whom the invoice was issued (debtor company) and the issuing company (supplier and invoice seller) are responsible for its payment.
Therefore, in the event of a default by the debtor company, investors have the right to demand payment from the assignor company as well. By extending payment responsibility to both companies, we significantly reduce the risk of the operation.
For example, if the probability of default for Company A and Company B is 10%, with recourse, the overall default probability would be estimated at 10% * 10% = 1%, thereby reducing the risk by a factor of 10 in this scenario.
By opposition, in a factoring operation without recourse, only the debtor company is responsible for the payment of that invoice.
At Daskapital, all factoring operations are with recourse.
If you need further clarification, please contact us via support@daskapital.eu.
