Factoring Agreement Draft With Recourse In Virginia

Q: Is factoring receivables without recourse a sale of receivables?

Beyond that benefit, there aren&#039;t many other advantages to using non-recourse factoring over recourse factoring. True non-recourse factoring involves a true sale of the receivable.

Category:

Contracts - Factoring

State:

Multi-State

Control #:

US-00037DR

Format:

Instant download

Description

The Factoring Agreement Draft With Recourse in Virginia establishes a legal framework for the assignment and purchase of accounts receivable between a Factor and a Client. This agreement allows the Client, typically engaged in credit sales, to obtain immediate funds by selling its receivables to the Factor, who assumes responsibility for collecting those debts. Key features include provisions for the assignment of accounts receivable, approval processes for sales, and guidelines for handling client risks. It outlines obligations like the submission of financial statements, rights under contracts, and warranties regarding asset solvency. Users will find filling instructions straightforward; they must provide their names, addresses, and specific financial details, and adhere to established credit limits. This document is particularly useful for attorneys, partners, owners, associates, paralegals, and legal assistants involved in commercial finance, allowing them to understand the complexities of factoring agreements and ensure compliance with the legal requirements in Virginia.

Difference between factoring and assignment

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FAQ

Beyond that benefit, there aren't many other advantages to using non-recourse factoring over recourse factoring. True non-recourse factoring involves a true sale of the receivable.

Recourse factoring is the most common and means that your company must buy back any invoices that the factoring company is unable to collect payment on. You are ultimately responsible for any non-payment. Non-recourse factoring means the factoring company assumes most of the risk of non-payment by your customers.

Recourse is more common than non-recourse factoring. Many factoring companies are weary of non-recourse as it means they are liable for debtor non-payment. Still, there are many advantages to working on a recourse agreement for business owners. For one, advance rates are usually higher.

What is bank factoring? The name, bankfactoring, might suggest that it is the bank that provides factoring services, but this is a simplification. It is not the banks, but actually companies specifically delegated by them to use bank capital, that offer factoring.

There are two types of debts: recourse and nonrecourse. A recourse debt holds the borrower personally liable. All other debt is considered nonrecourse. In general, recourse debt (loans) allows lenders to collect what is owed for the debt even after they've taken collateral (home, credit cards).

The Purchaser acknowledges and agrees that all Accounts Receivable and other rights to payment from customers that will be transferred to the Purchaser pursuant to this Agreement will be transferred without any recourse to any Seller, except (i) as contemplated by Section 1.3 above, (ii) for the Purchaser's rights ...

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”.