What YOU are about to READ is URGENT and its an FYI - Did YOU know that 100% TRUE FACTORING and/or Accounts Receivable Factoring is NEVER in the form of a LOAN - EVER. Its a PRIME Example for those Operating in a Chapter 11 Bankruptcy.
Now Factoring allows YOUR CASH FLOW PROBLEMS to be corrected when DONE RIGHT, now there are two (2) type of Factoring one being that is called FULL RECOURSE which is where by the Factor will purchase the Accounts Receivable from a Client but DOES NOT ASSUME THE LIABILITY FOR THE LOSS SUSTAINED DUE TO THE INSOLVENCY OR BANKRUPTCY OF A CUSTOMER.
While a Non - Recourse Factoring Arrangements are where the client depends on the Factor to approve the credit of each account debtor and assume the RISK of NON - PAYMENT should an account debtor fail.
With NON - RECOURSE Transaction(s), the Factor takes on the role of insurer. One of the major problems associated with non-recourse factoring transactions is that factors will not take the RISK associated with purchasing invoices payable by small accounts debtors with little or NO CREDIT HISTORY.