Accounts Receivable Factoring Agreement

# Accounts Receivable Factoring Agreement This Accounts Receivable Factoring Agreement ("Agreement") is entered into as of ___________ by and between: **Client:** ___________, a ___________ organized under the laws of the State of ___________, with a principal place of business at ___________ ("Client"); and **Factor:** ___________, a ___________ with a principal address at ___________ ("Factor"). --- ## 1. Definitions - **"Account"** or **"Receivable"** means any right of Client to payment from a customer (each, an "Account Debtor") arising out of Client's sale of goods or performance of services. - **"Eligible Account"** means an Account that meets all of the Eligibility Criteria set forth in Section 4. - **"Advance Rate"** means ___________% of the face amount of each Eligible Account purchased. - **"Factoring Fee"** means ___________% of the face amount of each Eligible Account, accruing every ___________ days from the date of purchase until the Account is collected or repurchased. - **"Reserve"** means the difference between the face amount of a purchased Account and the Initial Advance paid to Client, held by Factor and released upon collection less Factoring Fees and other charges. - **"Recourse"** means Client's obligation to repurchase Accounts that are not collected within the applicable Collection Period. - **"Collection Period"** means ___________ days from the invoice date of each purchased Account. --- ## 2. Purchase Facility 2.1 **Facility Limit.** The maximum outstanding balance of purchased Accounts at any time shall not exceed ___________ (the "Facility Limit"), unless Factor agrees otherwise in writing. 2.2 **Term.** This Agreement shall be effective from the date hereof through ___________ (the "Initial Term") and shall automatically renew for successive one-year periods unless either party provides sixty (60) days' written notice of non-renewal prior to the end of any term. 2.3 **Non-Exclusive.** Client may continue to collect and manage accounts that are not submitted to Factor under this Agreement, subject to Factor's first-priority security interest in all of Client's Receivables as set forth in Section 12. --- ## 3. Purchase and Sale of Eligible Accounts 3.1 **Submission.** Client shall submit Eligible Accounts for purchase by delivering to Factor a schedule of accounts (the "Schedule of Accounts") in the form prescribed by Factor, accompanied by copies of invoices, purchase orders, proof of delivery, and such other documentation as Factor may require. 3.2 **Factor's Acceptance.** Factor shall have the right to accept or reject any submitted Account in its sole discretion. Factor's purchase of an Account is conditioned upon verification of the Account and the Account Debtor's creditworthiness. 3.3 **Initial Advance.** Upon Factor's acceptance and verification of an Eligible Account, Factor shall remit to Client an amount equal to the Advance Rate multiplied by the face amount of that Account (the "Initial Advance"), less any then-outstanding fees, charges, or amounts owed by Client to Factor.