Non-recourse invoice factoring benefited a temporary staffing agency client when Constar Plastics filed for Chapter 11 bankruptcy. The transfer of risk amounted to over $187,000.00 when Riviera Finance purchased invoices from the staffing company on a non-recourse basis, assuming the credit risk, and subsequent credit loss.
Often times, the value of non-recourse factoring is under estimated, but when extending trade credit to a customer there is a varying degree of credit risk. In this instance, the staffing agency’s customer, Constar Plastics lost a contract with Pepsico and eventually filed for bankruptcy.