Is Invoice Line of Credit a type of loan?
No. Invoice Line of Credit is not a loan. It is the purchase of an asset, accounts receivable, at a discount by a financial institution called a factor. A traditional bank loan uses a companies assets as collateral and typically requires personal guarantees. Invoice Invoice Line of Credit or account receivables Invoice Line of Credit relies on the credit-worthiness of the customers, not your client’s balance sheet or history. Q: What is the difference between Invoice Line of Credit invoices “without recourse” and Invoice Line of Credit invoices “with recourse”? A: When an invoice is factored without recourse, it is considered Invoice Line of Credit on a “non-recourse” basis. In this situation, the factor takes the credit risk of the client’s customers, thereby protecting the client from credit loss. When an invoice is factored with recourse, it means the client is ultimately responsible for payment, regardless of whether the client’s customer pays. Q: When is Invoice Line of Credit NOT
