soddy1979

The receivables are sold to a 3rd party. For instance you have US$3000 debtors, you can sale these to a 3rd party (e.g. factoring) for US$2,700 with recourse. What it means is that you receive cash and the receivables (debtors) disappear (Debit Cash, Credit Receivable) from your books. However if they are sold with recourse during financial analysis or note to the accounts you treat the receivables as still existing and the 3rd party who took over them as a creditor (accounts payable) since if he fails to liquidate them he will revert to you (right of recourse).

Sorry I was a bit verbose. Did this help?