Factoring Agreement With Recourse In Wake

Category:

Contracts - Factoring

State:

Multi-State

County:

Wake

Control #:

US-00037DR

Format:

Instant download

Description

The Factoring Agreement with Recourse in Wake is a legal document outlining the terms under which a factor purchases accounts receivable from a client while allowing the factor to seek recourse against the client for specific losses. This agreement facilitates the client in securing immediate funds by selling unpaid invoices, thus enhancing cash flow for ongoing business operations. Key features include the assignment of accounts receivable, sales and delivery protocols, credit approval processes, and explicit conditions for liability in the event of customer insolvency. Attorneys, partners, owners, associates, paralegals, and legal assistants will find this form particularly useful as it comprehensively addresses the necessity for ensuring compliance with legal and financial obligations while managing customer credit risks. The agreement specifies details such as the purchase price calculations, requirements for documentation submission, and the assignment of rights. Additionally, it includes terms on breach of warranty, termination procedures, and arbitration provisions, all crucial for protecting the rights of involved parties. By utilizing this form, legal professionals can effectively assist businesses in navigating the complexities of debt collection and maintaining healthy cash flow.

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FAQ

How to Record Invoice Factoring Transactions With Recourse Record a credit in accounts receivable for the sold invoice in the amount of $375,000. In the recourse liability column, record a credit after estimating the bad debts and any other possible losses ($750).

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.

The Most Common Invoice Factoring Requirements A factoring application. An accounts receivable aging report. A copy of your Articles of Incorporation. Invoices to factor. Credit-worthy clients. A business bank account. A tax ID number. A form of personal identification.

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.

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”.

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).