This factoring agreement template is typically used in an intercompany transaction whereby a group company sells or assigns its accounts receivable to another group company that operates as factor. In this particular agreement the sale of the receivables transfers ownership of the receivables to the factor, indicating that the factor obtains all of the rights associated with the receivables. In addition, the receivables are transferred “without recourse”, implying that the factor bears the loss if the account debtor does not pay the invoice amount.

This agreement template is used to state the rights and responsibilities and to substantiate the at arm’s length character of the transaction between a typical factor and a seller of accounts receivable. Common terms in this agreement template inter alia cover the purchase (process) of accounts receivable, purchase price and advances, warranties and representations, commission and interest, disputes and claims and termination and default.