Find Me Funders
Repurchase
Also called buyback, chargeback, repurchase obligation.
The client's obligation to buy an invoice back from the factor when it turns out to be disputed, ineligible, already paid or otherwise not what was warranted.
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
Every factoring agreement contains one, including non-recourse agreements. It is the mechanism by which risks the factor never agreed to take are returned to the client.
Common triggers:
- The customer disputes quality, quantity, delivery or performance
- A credit memo, return, allowance or short pay reduces the amount owed
- The customer asserts an offset or contra account
- The invoice was outside an approved credit limit or otherwise ineligible when purchased
- A breach of the validity warranties: the invoice is not genuine, the work was not performed, the assignment was not permitted, or the receivable was already sold or pledged
- On a recourse facility, the invoice is simply unpaid at the end of the recourse period
Execution is by netting: against the reserve first, then against the next advance, then by cash demand. Where the client has stopped submitting new invoices, the demand comes directly and the personal guarantee sits behind it.
Where this one catches people
Repurchase is why non-recourse is narrower than the word suggests. The factor took the risk that your customer goes insolvent; it did not take the risk that your customer says the work was defective. Disputes, not bankruptcies, are how most invoices go bad, and every dispute is a repurchase whatever the facility is called.
Where you will meet this term
Read next
Repurchase — common questions
What does repurchase mean?
The client's obligation to buy an invoice back from the factor when it turns out to be disputed, ineligible, already paid or otherwise not what was warranted.
Where does repurchase catch people out?
Repurchase is why non-recourse is narrower than the word suggests. The factor took the risk that your customer goes insolvent; it did not take the risk that your customer says the work was defective. Disputes, not bankruptcies, are how most invoices go bad, and every dispute is a repurchase whatever the facility is called.
Is repurchase the same as an interest rate?
Repurchase 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 repurchase apply to?
Invoice Financing, Asset-Based Lending.
Is there a worked example of repurchase?
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 repurchase?
Invoice factoring, Non-recourse, Personal guarantee, Receivable, Recourse.
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.