Non-Recourse A/R = Very Expensive Insurance

Some providers pitch non-recourse factoring like “peace of mind.” In practice, you’re paying a large
insurance premium every week for a risk that’s already very low—and the “coverage” often has carve-outs.

Cost vs Risk — Non-Recourse vs Typical Default

You’re paying ~5% of payroll for protection against a <1% default risk (illustrative).

Why We Rarely Recommend Non-Recourse

  1. The real risk is tiny. In staffing, bad-debt losses are typically well under 1% for well-run books.
  2. The cost is massive—because it’s charged on payroll, not invoices. For us to take on non-recourse risk,
    we must charge 5% on payroll (your biggest expense). If this were priced against invoice face value—as many
    A/R factoring companies do—it would be even more expensive.
  3. Coverage has carve-outs. Disputes, fraud, late pays, and certain bankruptcies often aren’t truly covered.
    You’re paying extra for protection that doesn’t fully protect you.
  4. The math doesn’t pencil. If weekly payroll is $100,000, a 5% non-recourse premium is $5,000 per week.
    That’s ~$260,000 per year for an unlikely event—dollars that could fuel recruiting, sales, or margin.

Our Recommendation

Stick with standard recourse funding. You’ll keep more margin, maintain discipline in credit & collections,
and avoid paying a perpetual premium for “insurance” you’ll probably never use.

Quick Cost Check
Weekly Payroll: $100,000 → Non-Recourse Premium (5%): $5,000 / week → ~$260,000 / year.

FAQ

“Can I still get non-recourse if I insist?”
Yes, but we’ll be candid about the price (5% of payroll) and the carve-outs. Most clients switch back after seeing the math.

“What should I do instead?”
Recourse funding + tight credit approvals, transparent terms, and proactive collections. It’s the best ROI.

Note: The default-rate example is illustrative and varies by portfolio quality, segment, and credit policy.