Missouri General Form of Factoring Agreement - Assignment of Accounts Receivable

• Category: Contracts - Factoring
• State: Multi-State
• Control #: US-0270BG
• Format: Word; Rich Text

Description

This form is a factoring agreement for the assignment of accounts receivable. Factoring is a financial transaction in which a firm sells its accounts receivable invoices to a third party called a factoring firm at a discount, so that it receives immediate money to continue its business. The factoring firm pays a percentage of the invoices immediately. Firms often factor receivables to improve their cash flow.

Missouri General Form of Factoring Agreement — Assignment of Accounts Receivable refers to a legal document used in the state of Missouri to establish a factoring agreement between two parties involved in the transfer of accounts receivable. This agreement outlines the terms and conditions under which the assignor, an entity owing accounts receivable, assigns its rights to the assignee, typically a financial institution or factoring company. The Missouri General Form of Factoring Agreement serves as a binding contract between the assignor and assignee, securing the assignee's rights to collect and manage the assigned accounts receivable. By signing this agreement, the assignor agrees to assign all rights, title, and interest to the assignee. The assignee, in turn, assumes the responsibility to collect and administer the assigned accounts receivable. This type of agreement is commonly used by businesses seeking immediate cash flow by selling their accounts receivable to a factoring company. It allows the assignor to acquire cash upfront instead of waiting for customers to pay their outstanding invoices. The factoring company then takes over the task of collecting the payments directly from the customers. Different types of Missouri General Form of Factoring Agreement — Assignment of Accounts Receivable may exist based on various factors such as the specific terms negotiated between the assignor and assignee, the scope of the assignment, and the industries involved. Some common variations of this agreement include: 1. Recourse Factoring Agreement: This type of agreement allows the factoring company to recourse back to the assignor if any customer fails to pay the assigned accounts receivable. The assignor remains liable for any uncollected or disputed receivables. 2. Non-Recourse Factoring Agreement: Under this agreement, the factoring company assumes the risk of non-payment by customers. If a customer fails to pay, the factoring company cannot seek recourse from the assignor. This type of agreement usually comes with higher fees due to the increased risk taken on by the factoring company. 3. Concentration Factoring Agreement: In a concentration factoring agreement, the assignor assigns a specific concentration or group of specific customer accounts to the factoring company. This may be beneficial for businesses with a few major customers or in industries where certain customers contribute a significant portion of the accounts receivable. 4. Multiple Invoice Factoring Agreement: This variation allows the factoring company to purchase individual invoices from the assignor rather than the entire accounts receivable portfolio. It provides more flexibility to the assignor, enabling them to select which invoices to sell based on their immediate cash flow needs. It is essential for both parties entering into a Missouri General Form of Factoring Agreement to carefully review and negotiate the terms to ensure clarity, protection of rights, and compliance with relevant laws and regulations. Seeking legal advice is often recommended ensuring that the agreement meets the specific needs and requirements of both the assignor and the assignee.