Recourse vs Non-Recourse Factoring
What is recourse vs non-recourse factoring? Recourse factoring means the trucker buys back the invoice if the broker doesn't pay; non-recourse factoring means the factor absorbs the loss on broker insolvency.
Full definition
In recourse factoring, the trucker remains on the hook if the broker defaults — the factor will charge back the advance, often after 60-90 days of non-payment. Rates are lower because the factor's risk is lower.
Non-recourse factoring transfers credit risk to the factor for specific events, almost always limited to broker bankruptcy or insolvency. It does not cover disputes, billing errors, or slow-pay. The fee is higher and brokers must be on the factor's approved list.
Most owner-operators with vetted brokers pick recourse for the lower rate. Carriers hauling for unfamiliar or marginal brokers often pay up for non-recourse insurance.