Hello, I'm Paul DeLuca, founder of Meritus Capital. Today, we're talking about non-recourse factoring. What exactly is non-recourse factoring?
I get asked this question all the time. It generally comes up because there's been some kind of discussion that a customer or a client has had with a factoring company and they advertise non-recourse factoring. By this simple term, you would think that there's really no reason that the factoring company would ever come back to the customer and ask for its money back. But, actually, there's many times that these companies will require that there be repayment.
Here's what my suggestion is, if you ever look to enter into a non-recourse factoring transaction, ask the factoring company under any circumstances, give you a list of why they could come back and ask for the money back. This may sound simple, but it really isn't. If you ask them to give you a detailed list of any reasons they could ever ask for the money back, well then, you would discover all the reasons that it truly is recourse.
A true non-recourse factoring deal, it really means that under no circumstances, would the factoring company ever ask for its money back. Make sure you get this in writing. Make sure the contract is very clear and make sure that your client knows that the product has been shipped or the service has been performed and you're able to make sure this is clarified with your company.
I hope this has been informational. If you ever have any questions about this, I'm more than happy to answer any other questions. We're here for you anytime. Until next time, make it a great successful day.