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Recourse factoring

Factoring without a debtor insolvency risk takeover

Four reasons to choose Coface recourse factoring:
  • flexible financing facility
  • better liquidity
  • diversified sources of financing
  • service synergy with business information, debt collection and insurance
Recourse factoring (factoring – without a default risk takeover) is a device to finance short-term receivables before the due date.

Recourse factoring is a perfect product for all businesses planning to boost sales or for those having high capital requirements coming out of their business specific.


  • be able to freely manage the unique service and to switch to non-recourse factoring at any time.
  • online service administration only
  • access to other protection services such as debt collection – for both domestic and foreign debtors

Recourse factoring – a case study

Recourse factoring – a case study

A steel distributor sells steel to 9 Polish machine manufacturers. Most of them have been their clients for many years and they are solid businesses. The clients never pay late but - due to long production processess - the expect  long payment terms with an average due date of 80 days. However, the distributor has to pay their suppliers (e.g. steel manufacturers) within 30 days which leaves a huge gap between incoming and outgoing payments.

This gap increases the risk of non-payment of distributors trade liabilities on time and may lead to serious liquidity problems or even bankruptcy. To avoid that, the company has to streamline it cash flow. As this is a seasonal business, the distributor needs financing adjusted to the seasonal needs. 


The company signed a recourse factoring contract with us. Now the company assigns their selected  receivables (from selected debtors) to Coface, and straight away receives an advance payment of up to 90 per cent of the invoice total amount. The remaining amount (retained part, usually 10% to 20% of the invoice amount) is paid out on the client payment day. However, Coface hasn’t assumed the non-payment risk and if the debtor fails to pay within the payment due date, the distributor has to return the advance paid-out earlier. The contract specifies a so called recourse period starting from the payment due date. In that period, Coface assists the distributor in collecting the overdue amount.   


To sum up

Instead of waiting 80 days for payment from their clients, the distributor gets cash within 48 hours of notifying Coface on the issuance. The company may spend the advance money at their own discretion, for instance, pay their current dues and get extra discounts for early or timely payments.

If you buy Coface factoring service, you also get payment monitoring, debt collection and payment reports all under the same factoring contract. All this will help you improve your liquidity and the management of your receivables

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