A factor is a person who sells goods for a commission. A factor takes possession of goods of another and usually sells them in his/her own name. A factor differs from a broker in that a broker normally doesn't take possession of the goods. A factor may be a financier who lends money in return for an assignment of accounts receivable (A/R) or other security.
Many times factoring is used when a manufacturing company has a large A/R on the books that would represent the entire profits for the company for the year. That particular A/R might not get paid prior to year end from a client that has no money. That means the manufacturing company will have no profit for the year unless they can figure out a way to collect the A/R.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
West Virginia Factoring Agreement is a legally binding contract entered into between a business owner in the state of West Virginia and a factoring company. Factoring, also known as accounts receivable financing, is a financial transaction where a business sells its accounts receivables (unpaid invoices) to a third party factoring company at a discounted rate to improve its cash flow. The prime purpose of a West Virginia Factoring Agreement is to provide immediate working capital to the business by solving its cash flow problems. The factoring company advances a certain percentage (typically 70-90%) of the invoice value to the business upfront, and the remaining amount (minus the factoring fee) is paid to the business once the customer pays the invoice in full. The factoring fee is usually a percentage of the total invoice value and is determined based on the creditworthiness of the customer and the duration of the agreement. West Virginia Factoring Agreements may vary depending on the specific terms and conditions agreed upon between the business owner and the factoring company. However, some common types of factoring agreements include: 1. Recourse Factoring Agreement: In this type of agreement, the business owner remains liable if the customer fails to pay the invoice within a specified time frame. The factoring company has the right to "recourse" the unpaid invoice back to the business. 2. Non-Recourse Factoring Agreement: This type of agreement provides more risk protection to the business owner. If the customer fails to pay the invoice due to insolvency or bankruptcy, the factoring company assumes the risk and absorbs the loss. 3. Spot Factoring Agreement: Spot factoring allows the business owner to choose which specific invoices to factor. It provides flexibility as the business can select the invoices that need immediate cash flow and leave out those that do not. 4. Whole Turnover Factoring Agreement: This type of agreement requires the business to factor all of its accounts receivables. It is suitable for businesses that require consistent and ongoing cash flow. A West Virginia Factoring Agreement typically contains essential terms such as the factoring fee, the duration of the agreement, the credit terms for customers, and the procedures to handle any disputes or non-payments. It is crucial for business owners to carefully review and understand the terms and conditions of the agreement before entering into a factoring arrangement as it directly affects their cash flow and financial stability.
