The pledging of receivables differs from factoring in that,under pledging,the lender normally has recourse against the borrower.

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In pledging of receivables, the borrower retains ownership of the receivables and pledges them as collateral for a loan. The lender has recourse against the borrower if the borrower fails to repay the loan. On the other hand, in factoring, the factor purchases the receivables from the borrower and assumes ownership and responsibility for collecting payment from the debtor. The factor has no recourse against the borrower if the debtor fails to pay, as the risk is assumed by the factor.

The Pledging of Receivables Differs from Factoring in That,under Pledging,the