Factoring Agreement

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Factoring Agreement

Factoring refers to an old financing method which is adopted by many businesses when they are in need of cash but is unable to attain them from their immediate customers. Under this method the business manufactures sells/ delivers the commodity to its customers and generates invoice for the same. The business then transfers these invoices to a third party which is granted the right to collect the money from the customers of the business.

The third party pays the business some discounted value of the invoice. The business is paid a prefixed amount at time of transfer and rest on collection form customers. The contract which records the details of such a deal between a business and the third party is referred to as a factoring agreement. The agreement mentions the discount rate, the percent of amount payable on transfer of invoice and other terms and conditions of the whole arrangement.

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Sample Factoring Agreement

Factoring Agreement

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