Factoring Agreement Meaning With Example In Illinois

• Category: Contracts - Factoring
• State: Multi-State
• Control #: US-00037DR
• Format: Word; Rich Text

Description

A factoring agreement is a financial arrangement where a business (the Client) sells its accounts receivable to a third party (the Factor) at a discount in exchange for immediate cash. In Illinois, for example, a manufacturing company might use a factoring agreement to manage cash flow by selling its customer invoices instead of waiting for payment. Key features of this form include assignment of accounts receivable, approval processes for sales, credit risk assumptions, and responsibilities for both parties regarding merchandise and payment collection. Filling out the agreement involves providing accurate details about the Client and Factor, defining terms like purchase price and commission rates, and ensuring that the Client understands their obligations to report sales and returns promptly. This form is particularly useful for attorneys, partners, owners, associates, paralegals, and legal assistants as it provides a structured method for securing funding and managing debts, allowing businesses to maintain liquidity while minimizing the financial risk associated with customer non-payment.