A type of factoring in which the factor provides finance to the seller of debt (receivables) only after having served a notification to the debtors (customers), requesting them to make payment to the factor. The seller of debt is responsible for most of the processes usually associated with factoring, and which otherwise, i.e., under normal conditions, would be undertaken by the factor, specifically including: administrative services (sales ledger maintenance), credit control/ credit protection, and collection of receivables. The only service that a factor provides under this type of factoring is the financial service (providing finance and undertaking all underlying requirements).

By nature, this factoring arrangement is operated on a recourse basis (recourse factoring).