Debt Factoring Agreement Template

Your client`s insolvency, late payment and refusal to pay are exactly the types of risks that the factoring company assumes in a genuine non-recourse agreement. Also keep in mind that in the above clause, factoring companies may not cough up money; Instead, they will « debit » or debit your reserve account. In other words, all the money that the factoring company will keep in reserve, it will take it for itself. In fact, you always have to pay them. First, your company will probably receive a letter of proposal (it`s not a contract) from the postman that contains some, but not all, terms and conditions, which can be included in the factoring agreement. This letter of proposal usually requires your signature and a down payment. The postman will then send you the proposed factoring documents, including the factoring agreement, personal guarantees (if the factor makes advances), a secretariat or management certificate (depending on whether your company is a limited liability company or company), a proposed communication to your clients that your company`s claims have been assigned to the factor, as well as various related documents and agreements. If you read the language of recourse, you will know. As a general rule, an agreement that does not have a language of appeal is not a remedy, so you should look for the language of appeal. The factoring agreement (also known as « buy-to-sale contract ») will have something like this: the factoring agreement is usually 10 pages or more and may seem overwhelming at first. Below, you`ll find 10 conditions in all factoring agreements that you need to verify and understand: Sometimes, but not always, factoring companies will include a « buyout » clause in a factoring contract.

These clauses govern the purchase of the invoice by your company, the factoring company. Because factoring includes « buying and selling » invoices in which your business sells invoices to the factoring company, the buyback means you will buy them back. This can be done for many reasons, such as the invoice that is outstanding for more than 90 days. But then again, it is important to understand the language.