Factoring Agreement Without Recourse In Massachusetts

Category:

Contracts - Factoring

State:

Multi-State

Control #:

US-00037DR

Format:

Instant download

Description

The Factoring Agreement Without Recourse in Massachusetts outlines the terms under which a factor purchases accounts receivable from a client without recourse, meaning that the factor assumes the credit risk associated with these accounts. This agreement aids businesses looking to improve cash flow by providing immediate funds from their sales on credit. Key features include the assignment of receivables, credit approval processes, and the clear delineation of responsibilities for both the factor and the client concerning sales, collections, and returns. The document also specifies conditions for payment, including fees and commissions. Filling instructions require users to complete pertinent information such as the date, names of parties, and specific terms like commission percentages. This form is particularly useful for attorneys, partners, owners, associates, paralegals, and legal assistants involved in structuring financial agreements, ensuring compliance with legal standards, and safeguarding their clients' interests in commercial transactions.

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FAQ

Factoring without recourse means that the risk of accounts receivable being uncollectible transfers from the buyer to the seller. Basically, if an accounts receivable cannot be collected, the seller does not have to reimburse the buyer like they would if the factoring was “with recourse”.

When a company factors receivables it means that they sell them to another party. If the transaction is without recourse that means the buyer takes on all the risk of credit losses. The seller of the accounts receivable does not bear any risk after the sale is complete.

Documents you will have to provide: Factoring application. Articles of Association or registered Amendments to the Articles of Association of your company. Annual report for the previous financial year. Financial report (balance sheet andf profit/loss statement) for the current year (for 3, 6 or 9 months, respectively)

With recourse factoring, the business is responsible. But with non-recourse factoring, the factoring company is responsible, although there may be some stipulations based on the terms of the agreement. Higher advance rates (i.e. amount of funding you receive upfront). Lower advance rates.