Chicago, Illinois General Form of Factoring Agreement — Assignment of Accounts Receivable: Explained in Detail A Chicago, Illinois General Form of Factoring Agreement — Assignment of Accounts Receivable is a legal document that outlines the terms and conditions for a factoring agreement in the city of Chicago, Illinois. Factoring is a financial transaction where a company sells its accounts receivable to a third-party called a factor in exchange for immediate cash. This type of agreement is commonly used by businesses in Chicago, Illinois to improve their cash flow and meet their short-term financial needs. By assigning their accounts receivable, businesses can access immediate cash instead of waiting for customers to pay their outstanding invoices. The factor, who purchases the accounts receivable, assumes the responsibility of collecting payment from the customers. The Chicago, Illinois General Form of Factoring Agreement includes various clauses and provisions that must be agreed upon by the parties involved. These provisions typically include the following: 1. Assignment of Accounts Receivable: This provision establishes that the business is transferring the ownership rights of its accounts receivable to the factor. It specifies the accounts receivable that are being assigned and any restrictions on the assignment. 2. Factoring Fee and Terms: This section defines the fee structure for the factoring services provided by the factor. It outlines the factoring rate, which is often a percentage of the total invoice value, and any additional fees that may be applicable. This provision also specifies the frequency of fee payments. 3. Repurchase Obligation: The repurchase obligation clause outlines the circumstances under which the business may have to repurchase the sold accounts receivable from the factor. This may occur if the customer fails to pay the invoice within a certain timeframe or disputes the validity of the invoice. 4. Payment Terms: This provision defines the terms and conditions for the payment of the purchased accounts receivable to the business. It establishes the timeframes for payment, such as within a certain number of days after receipt of payment from customers. 5. Dispute Resolution: This section outlines the procedures for resolving any disputes that may arise between the parties during the course of the factoring agreement. It may specify the use of arbitration or mediation to settle disputes. Different types of Chicago, Illinois General Form of Factoring Agreement — Assignment of Accounts Receivable may exist based on specific industry requirements, the size of the business, or the duration of the factoring arrangement. However, the core provisions mentioned above are typically found in most factoring agreements. In conclusion, a Chicago, Illinois General Form of Factoring Agreement — Assignment of Accounts Receivable is a crucial legal document that facilitates the transfer of accounts receivable from a business to a factor in exchange for immediate cash. It enables businesses in Chicago, Illinois to optimize their cash flow and effectively manage their working capital.