Home Receivables financing: what is it? Types of receivables financing agreements Non recourse factoring

Non recourse factoring

Finance your cash flow through your receivables while being fully protected against non-payment. With non-recourse factoring, the responsibility for recovering unpaid invoices lies with the factor: if a customer fails to pay, your company does not have to reimburse the advance received.

Definition of non-recourse factoring

Non-recourse factoring consists of assigning your customer receivables to a factoring company, which advances part of their value (generally up to 90%) and assumes the risk of non-payment.

Your receivables must be approved by the factor for it to waive its right of recourse. Before purchasing the invoices, the factor assesses whether the insolvency risk of your debtors is acceptable and conducts a detailed credit analysis, including:

  • payment history
  • financial statements
  • internal or external credit ratings

If a customer fails to pay, the factor bears the loss. The risk is either managed internally by the factor’s credit department or transferred externally through a credit insurance policy.

How does non-recourse factoring work?

Risk assessment

The factor analyses the financial strength of your customers and sets a credit limit for each debtor.

Assignment of receivables

You submit your invoices via electronic data transfer or through a secure online platform.

Immediate financing

Within 24 to 48 hours, you receive an advance of up to 90% of the total invoice amount (including VAT).

Coverage of non-payment

If a customer defaults, the factor (or its credit insurer) covers the loss without recourse to your company. You are therefore not required to reimburse the advance received.

Illustration méchanisme

The benefits of non-recourse factoring

Total protection against non-payment

You are fully protected against the risk of default on your insured receivables, even in the event of insolvency of a key customer.

Predictable cash flow

Financial flows are secured, ensuring that your cash flow plan is not affected by customer defaults.

Time savings and peace of mind

No need to set aside provisions or manage complex debt recovery procedures in the event of non-payment.

Enhanced credibility

Non-recourse coverage reassures your financial partners and strengthens your risk ratios.

Off-balance sheet treatment

The non-recourse structure is one of the key conditions for achieving off-balance sheet treatment. A lighter balance sheet, immediate cash, zero risk: deconsolidating factoring is the most comprehensive form of factoring.

Differences between recourse and non-recourse factoring

Non recourse

Responsibility: The factor fully assumes the risk of non-payment.

Cost: Higher, as the factor covers the credit risk.

Impact on cash flow: The company benefits from improved cash flow without exposure to the risk of unpaid invoices.

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Recourse

Responsibility: The company reimburses the factor in the event of customer non-payment.

Cost: Lower, since the credit risk remains with the company.

Impact on cash flow: The company benefits from improved liquidity, but remains exposed to potential unpaid invoices that may need to be settled.

Recourse factoring benefits

The Fibus promise: accelerating and simplifying the setup of your non-recourse financing.

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Frequently asked questions about non-recourse factoring

Who bears the insolvency risk?

The factor or its partner credit insurer covers the losses, and no recourse is taken against your company.

Is this type of financing more expensive?

Yes, factoring fees include a risk premium, but this cost is generally lower than the financial impact of a significant unpaid invoice.

Can the factor ever request repayment under a non-recourse agreement?

A recourse may still apply in certain exceptional cases, particularly if the statutory auditors determine that the non-payment resulted from the client’s own fault or misconduct.