Glossary · Factoring
Buyback
Also called: Repurchase, Invoice buyback
Definition
A buyback is a carrier's repurchase of a factored invoice that the debtor has not paid within the agreed recourse period, usually settled from the reserve or future fundings.
Buybacks come from recourse factoring. The contract sets a window, for example 90 days from purchase, and any invoice still unpaid at the end of it goes back to the carrier. Most factors don't ask for a check. They net the amount against the client's reserve or the next schedule, which is the chargeback mechanism.
Even under non-recourse terms, buybacks usually apply when an invoice goes unpaid because of a dispute, missing paperwork, or anything other than the debtor's covered insolvency. Read the contract's definition of a covered credit event before you promise a client otherwise.
A buyback is only as good as the client's future volume. If the carrier stops factoring with you, the obligation becomes an unsecured collection against a small company that may already be gone.