Assignment of Accounts Receivable
About this form
The Assignment of Accounts Receivable is a legal document through which an assignor transfers their rights and interests in specified accounts receivable to an assignee. This form is crucial for businesses seeking to secure financing or manage cash flow by allowing a third party to collect debts owed by customers. Unlike similar forms, this assignment specifically details which accounts are being transferred, the authority given to the assignee, and various assurances about the validity of the accounts.
What’s included in this form
- Date of assignment and identification of both assignor and assignee.
- Statement of assignment outlining the value received and rights transferred.
- Schedule of assigned accounts, detailing individual account information such as date of invoice, names of debtors, and amounts owed.
- Warranties related to the genuineness of documents and validity of accounts.
- Indemnification regarding encumbrances or claims against the accounts being assigned.
Situations where this form applies
This form is used when a business needs to assign its rights to collect payment on accounts receivable to another entity, often for financing purposes. It may be applicable in scenarios such as selling a company, entering into a factoring agreement, or simply seeking to enhance cash flow by transferring future payment rights. This allows the assignee to pursue collections directly.
Who this form is for
- Businesses looking to manage cash flow more effectively by selling their receivables.
- Companies involved in factoring arrangements where immediate cash is needed.
- Entrepreneurs or sole proprietors who need to assign their accounts receivable to a bank or financial institution for financing.
Completing this form step by step
- Identify the date of the assignment and provide the names and addresses of the assignor and assignee.
- Detail the statement of assignment, establishing the legal transfer of interests in the specified accounts.
- Complete the schedule of accounts assigned by listing each account with corresponding invoice information.
- Verify and sign to affirm the truthfulness of warranties concerning the documents and accounts being assigned.
- Ensure all parties receive a copy of the signed form for their records.
Does this document require notarization?
In most cases, this form does not require notarization. However, some jurisdictions or signing circumstances might. US Legal Forms offers online notarization powered by Notarize, accessible 24/7 for a quick, remote process.
Mistakes to watch out for
- Failing to accurately identify all specified accounts in the schedule.
- Not having both parties sign the form, which could render it unenforceable.
- Neglecting the warranties, which can lead to future disputes regarding the enforceability of the accounts.
- Overlooking the need to include the date of assignment, which is critical for legal purposes.
Benefits of completing this form online
- Convenient access to fill out and download the form from anywhere, at any time.
- Editability allows users to customize the form to fit their specific agreements.
- Reliability of professionally drafted content ensures compliance with legal standards.
State-specific compliance details
This form is a general form that can be adapted for use in different states. Since each state has its own laws, make any needed updates before completing it.
Form popularity
FAQ
Sign a Contract and Check Credit. Managing accounts receivable begins before the first invoice goes out the door. Track Accounts Receivable. A key part of this process is to effectively track accounts receivable. Make Payment Easy. Do Your Part. Re-Think Your Billing Approach.
The purpose of assigning accounts receivable is to provide collateral in order to obtain a loan. To illustrate, let's assume that a corporation receives a special order from a new customer whose credit rating is superb.
At the point of delivering the goods or services, the company debits Accounts Receivable and credits Sales Revenues or Service Revenues. When an account receivable is collected 30 days later, the asset account Accounts Receivable is reduced and the asset account Cash is increased.
The simplest definition of accounts receivable is money owed to an entity by its customers. Correspondingly, the amount not yet received is credit and, of course, the amount still owed past the due date is collections.
Account receivable is the amount which the company owes from the customer for selling its goods or services and the journal entry to record such credit sales of goods and services is passed by debiting the accounts receivable account with the corresponding credit to the Sales account.
Assignment of accounts receivable is a lending agreement whereby the borrower assigns accounts receivable to the lending institution.The borrower pays interest and a service charge on the loan and the assigned receivables serve as collateral.
It is not uncommon that companies with cash flow problems or those that have a desire to be paid on expedited terms assign their accounts receivables as collateral for a secured loan or they factor them.In the case of factoring, the contractor sells its accounts receivable to the financial institution or the factor.
The purpose of assigning accounts receivable is to provide collateral in order to obtain a loan. To illustrate, let's assume that a corporation receives a special order from a new customer whose credit rating is superb.