In Recourse Factoring this is the amount of money owed to the Factor for unpaid invoices (in part or as a whole) that the Factor purchased. There is a predetermined time period in which this occurs and is generally deducted from available reserves or future funding. In Non-Recourse factoring this is the amount of money owed to the Factor for unpaid invoices due to a disputed invoice in part or as a whole.
The money owed is shifted from the Account Debtor back to the Accounts Receivables Finance Client. The typical causes are the invoice has hit the pre-determined recourse date set up in the contract, or because there has been some form of dispute that needs to be resolved between the customer/client relationship rather than the finance company.
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