What defines factoring of receivables without recourse?

Factoring of receivables without recourse refers to a financial arrangement where a provider sells their accounts receivable to a third party (the factor) and transfers the risk of non-payment. The key characteristic of this arrangement is that the provider retains no liability for non-payment; if the patient fails to pay, it is the factor that assumes the loss. This distinction is crucial because it allows the provider to receive immediate cash flow from the receivables, effectively offloading the risk associated with collecting those payments.

In contrast, other choices involve scenarios where the provider retains some level of liability, such as needing to repay a loan if there are delays in payment or requiring upfront payment from the patient. These do not accurately describe the concept of factoring without recourse, which is all about relinquishing responsibility for potential non-payment to a third party. Additionally, conducting factoring with strict credit evaluations pertains to the due diligence a factor may perform but does not define the essence of factoring without recourse. Therefore, the clarity that the provider has no liability for non-payment encapsulates the fundamental principle of this financial decision.