Resource factoring and non-resource factoring are two types of factoring arrangements.
Resource factoring involves the sale of accounts receivable where the factor assumes the credit risk of the account debtors. In this case, the factor provides credit protection to the client and may take measures to collect the debts from the account debtors. Resource factoring is generally used by smaller businesses that do not have the resources to handle their own credit management and collection activities.
Non-resource factoring, on the other hand, involves the sale of accounts receivable without credit protection from the factor. In this case, the client retains the credit risk of the account debtors and is responsible for collecting the debts. Non-resource factoring is usually used by larger businesses that have the resources to manage their own credit management and collection activities.