Credit assignment without and with recourse
What is the assignment of credit?
It often happens that you have to "chase" a creditor to obtain what is owed to you, but also because of the urgency to obtain as soon as possible the liquidity necessary to carry out your company's business objectives.
In order to reduce the time, one of the solutions is represented by the so-called assignment of credit. This is a transfer of a sum of money or even a service that involves three parties: the assignor, the assignee and the assigned party.
- The assignor is the one who holds the credit.
- The assignee is the one who receives the credit transferred.
- The assignee is essentially the debtor.
Article 1260 of the Civil Code governs this practice.
Differences between the assignment of receivables without recourse and with recourse
The assignment of credit, in turn, can be with or without recourse.
- Non-recourse: in this case the assignor guarantees only the existence of the credit and not the solvency of the debtor.
- With recourse: in this case the assignor is responsible for payment, so much so that he must take responsibility for it in the event of default by the debtor.
Factoring with and without recourse
Let us take a concrete example of the assignment of a credit without recourse and with recourse, using a case of Factoring.
This type of factoring occurs when a company assigns a credit to a Bank, which represents the factor.
In non-recourse, the company obtains liquidity from the factor, freeing itself of any responsibility, but with the reduction of part of the liquidity.
With recourse, the company guarantees solvency but in return gets more liquidity from the Bank.
Phersei Agency proposes itself as an intermediary for the service of Credit Recovery without and with recourse.