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 Guam Factoring Agreement refers to a legal contract between a business owner in Guam (a territory of the United States) and a factoring company. Factoring is a financial transaction where a company sells its accounts receivable or invoices to a third-party factoring firm in exchange for immediate cash flow. The Guam Factoring Agreement typically outlines the terms and conditions of the transaction, including the agreed-upon discount rate and any additional fees charged by the factoring company. Through this agreement, the business owner gains access to quick cash by selling their invoices, enabling them to meet their working capital needs and avoid any cash flow constraints. There are two main types of Guam Factoring Agreements: recourse and non-recourse factoring. In a recourse factoring agreement, the business owner is responsible for any unpaid invoices or credit risks incurred by their customers. If a customer fails to pay, the business owner must buy back the invoice from the factoring company. This type of agreement is often favored by companies with established creditworthy clients. On the other hand, non-recourse factoring transfers the credit risk to the factoring company. In this arrangement, if a customer does not pay the invoice due to insolvency or bankruptcy, the factoring company absorbs the loss. Non-recourse factoring is typically preferred by businesses that want to mitigate credit risks and protect their cash flow from potential customer defaults. In addition to the types of factoring agreements, the Guam Factoring Agreement may also specify additional services provided by the factoring company. These services may include credit checks on customers, collections management, and professional account management. The agreement may also detail the duration of the contract, termination conditions, and any penalties or fees associated with early termination. In summary, a Guam Factoring Agreement is a legally binding contract that enables businesses in Guam to improve their cash flow by selling their invoices to a factoring company. It provides a valuable financial solution for businesses facing challenges related to slow-paying clients or limited working capital.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
