Last Updated and Fact-Checked: July 2026
In a recourse agreement, factoring companies typically wait 60 to 90 days from the invoice purchase date before issuing a chargeback. If the broker has not paid the factor by the end of this “recourse period,” the invoice is charged back to the carrier.
Overview
When operating under a recourse contract, you are the ultimate guarantor of the invoice. Knowing exactly how long do factoring companies wait to charge back recourse is essential for managing your cash flow reserves. If a $4,000 invoice hits its expiration date, that money will vanish from your next advance without warning.
Key Factors to Consider
- The Recourse Period: This is explicitly stated in your contract. The industry standard is 90 days, though aggressive factors may use 60 days, and lenient ones may offer 120 days.
- Aging Fees: During that 90-day wait, many recourse contracts charge “aging fees” (e.g., an extra 1% fee for every 30 days the invoice goes unpaid).
- The Chargeback Process: Once the limit is reached, the factor recoups the funds by deducting the total amount from your reserve account or from your next batch of submitted invoices.
Practitioner Note: “In my experience reviewing hundreds of factoring agreements, carriers are often shocked when a 90-day-old invoice comes back to haunt them. You must monitor your factor’s aging reports weekly to identify slow-paying brokers before the chargeback hits.”
Step-by-Step Process (Managing Aging Invoices)
- Log into Your Portal: Every week, review your factor’s “Aging Summary” report.
- Identify Slow Payers: Look for invoices crossing the 45-day and 60-day marks.
- Follow Up: Contact the broker’s accounts payable department yourself to ask why the invoice hasn’t been cleared. Sometimes it’s just a missing lumper receipt.
- Prepare for the Hit: If an invoice reaches day 80, assume you will be charged back on day 90 and keep cash in the bank to cover it. Read recourse factoring what happens if broker goes bankrupt.
Common Mistakes & Pitfalls
- Ignoring Aging Reports: Assuming the factoring company is handling collections and ignoring the fact that the clock is ticking against you.
- Overleveraging: Spending every dime of your advances, leaving no buffer to absorb a 90-day chargeback.
Frequently Asked Questions (FAQ)
What happens after the factor charges the invoice back to me? You now own the debt again. The factor will return the paperwork to you, and you can attempt to collect from the broker directly or file a claim against their surety bond.
If you are tired of managing chargebacks, review how to transition from recourse to non recourse factoring.
Reviewed by Dr. Alex Merton for financial accuracy.
About the Reviewer: Dr. Alex Merton is the Senior Financial Researcher at FactorFreight. With over 15 years in commercial logistics finance, Alex specializes in helping small carriers and owner-operators navigate complex cash flow solutions and factoring contracts. Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Privacy Policy