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Full recourse
Also called recourse, with recourse, recourse factoring.
The arrangement in which the seller of a receivable, or the borrower, carries the loss if the money never arrives, leaving the factor or lender out of the credit risk.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
In factoring, recourse means you must buy back or replace an invoice that remains unpaid beyond the recourse period, commonly by offset against your next funding rather than by writing a check. Full recourse means the factor takes no credit risk at all, which is reflected in the pricing.
In lending, full recourse means the lender can pursue the borrower and its guarantors personally for any shortfall after collateral is applied, rather than being limited to the collateral itself. Non-recourse lending exists mainly in commercial real estate and even there is usually riddled with carve-outs for fraud, waste and misapplication of funds.
Repurchase obligations also attach to invoices that turn out to be defective for reasons unrelated to credit: never delivered, disputed, already paid, or assigned to someone else.
Where this one catches people
Non-recourse factoring is almost always non-recourse only for the account debtor's credit failure, meaning insolvency or a formal default on an approved credit line. Everything else remains yours: disputes, short-pays, quality claims, offsets, late delivery, missing paperwork. Those are the reasons most invoices actually go unpaid. Read the definition of the covered event rather than the label on the product, and check whether coverage requires the factor to have approved the customer in advance.
Where you will meet this term
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Full recourse — common questions
What does full recourse mean?
The arrangement in which the seller of a receivable, or the borrower, carries the loss if the money never arrives, leaving the factor or lender out of the credit risk.
Where does full recourse catch people out?
Non-recourse factoring is almost always non-recourse only for the account debtor's credit failure, meaning insolvency or a formal default on an approved credit line. Everything else remains yours: disputes, short-pays, quality claims, offsets, late delivery, missing paperwork. Those are the reasons most invoices actually go unpaid. Read the definition of the covered event rather than the label on the product, and check whether coverage requires the factor to have approved the customer in advance.
Is full recourse the same as an interest rate?
Full recourse is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does full recourse apply to?
Term Loan, Invoice Financing, Asset-Based Lending.
Is there a worked example of full recourse?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside full recourse?
Chargeback, Credit Insurance, Factoring, Obligor, Personal guarantee.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.