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.
A Wyoming Factoring Agreement refers to a legal contract between a business (known as the "seller") and a financial institution (known as the "factor"). This agreement allows the seller to sell its accounts receivable (unpaid invoices) to the factor at a discounted price in exchange for immediate cash flow. Wyoming, being a state in the United States, has its own specific regulations and laws that govern factoring agreements within its jurisdiction. The Wyoming Factoring Agreement serves as a financial solution for businesses facing cash flow difficulties and seeking immediate access to working capital. By selling their accounts receivable to the factor, businesses can receive a percentage (typically around 70-90%) of the invoice amount upfront. The factor then collects payments from the customers of the seller directly, assuming the risk of non-payment. The main types of Wyoming Factoring Agreements include: 1. Recourse Factoring: In this type of agreement, the seller remains liable for any unpaid invoices in case the customer fails to pay within a specified period. If any customer defaults, the factor has the right to demand the seller to repurchase the invoice(s). 2. Non-Recourse Factoring: Unlike recourse factoring, in non-recourse factoring, the factor assumes the risk of non-payment or bankruptcy of the customer. If a customer fails to pay, the factor cannot demand the seller to repurchase the invoice(s). However, non-recourse factoring typically involves higher fees due to the increased risk assumed by the factor. 3. Spot Factoring: Spot factoring allows the seller to select and sell specific accounts receivable invoices to the factor, rather than committing to an ongoing relationship. This option provides flexibility to the seller in managing their cash flow needs on a case-by-case basis. 4. Full-Service Factoring: Full-service factoring encompasses a broader range of services provided by the factor. Along with purchasing accounts receivable, the factor may handle credit checks, collections, and customer management on behalf of the seller. This type of factoring agreement offers comprehensive support to businesses by outsourcing various financial and administrative tasks. The Wyoming Factoring Agreement is subject to Wyoming state laws, including the Uniform Commercial Code (UCC), which governs commercial transactions. It is important for businesses considering factoring to carefully review the terms and conditions of the agreement, as well as any potential fees and obligations. Consulting with legal and financial professionals is highly recommended ensuring compliance and protection of rights for both the seller and the factor.
