Recourse is cheaper because the carrier keeps the credit risk. If a broker goes bankrupt or simply never pays, the factor charges the advance back against the carrier’s account.
Non-recourse shifts that specific risk to the factor, but the protection is narrower than it sounds. It typically covers only debtor insolvency on invoices the factor pre-approved, not disputes over service, damage, or paperwork — those still come back to the carrier.
The practical questions are what exactly is covered, how the factor sets credit limits on brokers, and what happens to a disputed invoice under each model.
Example
A carrier on non-recourse factoring hauls a load for a broker the factor had approved. The broker files for bankruptcy before paying. Under non-recourse the factor eats the loss. But on a different load, the receiver disputes the count and short-pays — that is a service dispute, not insolvency, so it charges back to the carrier under either model.
Why it matters
Non-recourse is not blanket protection. Knowing exactly which failures it covers — and which still land on the carrier — is what makes the higher fee worth paying or not.