Cuyahoga Ohio General Form of Factoring Agreement - Assignment of Accounts Receivable

• Category: Contracts - Factoring
• State: Multi-State
• County: Cuyahoga
• Control #: US-0270BG
• Format: Word; Rich Text

Description

This form is a factoring agreement for the assignment of accounts receivable. Factoring is a financial transaction in which a firm sells its accounts receivable invoices to a third party called a factoring firm at a discount, so that it receives immediate money to continue its business. The factoring firm pays a percentage of the invoices immediately. Firms often factor receivables to improve their cash flow. The Cuyahoga Ohio General Form of Factoring Agreement — Assignment of Accounts Receivable is a legal document widely used in Cuyahoga County, Ohio, that outlines the terms and conditions of a factoring agreement between a business (the "Assignor") and a financial institution or factor (the "Assignee"). This factoring agreement allows the Assignor to sell its accounts receivable (i.e., unpaid invoices) to the Assignee in exchange for immediate cash flow. The Assignee, in turn, assumes the responsibility of collecting the outstanding payments from the Assignor's customers. This agreement typically contains several key provisions, including: 1. Definitions: The agreement defines important terms such as "Assignment," "Factor," "Dilution," and "Recourse Obligations" to ensure clarity and consistency throughout the document. 2. Assignment of Accounts: The Assignor assigns all its accounts receivable to the Assignee, granting them the right to collect on those invoices. This provision ensures that the Assignor relinquishes control over the accounts receivable and transfers the risk of non-payment to the Assignee. 3. Purchase Price: The agreement specifies the purchase price that the Assignee will pay the Assignor for the accounts receivable. This price is typically a percentage of the total invoice value, known as the advance rate. 4. Recourse Obligations: This provision determines the extent to which the Assignor is responsible for any uncollectible or disputed accounts. In a "recourse" arrangement, the Assignor bears the risk of non-payment and must reimburse the Assignee for any uncollected funds. In a "non-recourse" agreement, the Assignee assumes the risk, and the Assignor is not liable for non-payment. 5. Collection and Administration: The agreement outlines the Assignee's responsibilities regarding the collection and administration of the assigned accounts receivable. It may include guidelines on how the Assignor should continue invoicing its customers and how the Assignee should handle collections. 6. Confidentiality and Non-Compete: This provision protects the Assignor's confidential information and may include restrictions on the Assignor's ability to engage in similar factoring arrangements with other factors during the agreement's term. 7. Termination and Default: The agreement specifies the conditions under which either party can terminate the factoring arrangement, along with the consequences of default or breach of the agreement. Types of Cuyahoga Ohio General Form of Factoring Agreement — Assignment of Accounts Receivable: 1. Recourse Factoring Agreement: In this type of agreement, the Assignor retains the risk of non-payment, meaning they are financially responsible for any uncollectible accounts. The Assignee may seek reimbursement from the Assignor if the assigned accounts become uncollectible. 2. Non-Recourse Factoring Agreement: In a non-recourse arrangement, the Assignee assumes the risk of non-payment. If an assigned account becomes uncollectible due to the customer's insolvency or other specified circumstances, the Assignor is not required to reimburse the Assignee. These descriptions provide an overview of the Cuyahoga Ohio General Form of Factoring Agreement — Assignment of Accounts Receivable, highlighting its key provisions and different types found within the county.

The Cuyahoga Ohio General Form of Factoring Agreement — Assignment of Accounts Receivable is a legal document widely used in Cuyahoga County, Ohio, that outlines the terms and conditions of a factoring agreement between a business (the "Assignor") and a financial institution or factor (the "Assignee"). This factoring agreement allows the Assignor to sell its accounts receivable (i.e., unpaid invoices) to the Assignee in exchange for immediate cash flow. The Assignee, in turn, assumes the responsibility of collecting the outstanding payments from the Assignor's customers. This agreement typically contains several key provisions, including: 1. Definitions: The agreement defines important terms such as "Assignment," "Factor," "Dilution," and "Recourse Obligations" to ensure clarity and consistency throughout the document. 2. Assignment of Accounts: The Assignor assigns all its accounts receivable to the Assignee, granting them the right to collect on those invoices. This provision ensures that the Assignor relinquishes control over the accounts receivable and transfers the risk of non-payment to the Assignee. 3. Purchase Price: The agreement specifies the purchase price that the Assignee will pay the Assignor for the accounts receivable. This price is typically a percentage of the total invoice value, known as the advance rate. 4. Recourse Obligations: This provision determines the extent to which the Assignor is responsible for any uncollectible or disputed accounts. In a "recourse" arrangement, the Assignor bears the risk of non-payment and must reimburse the Assignee for any uncollected funds. In a "non-recourse" agreement, the Assignee assumes the risk, and the Assignor is not liable for non-payment. 5. Collection and Administration: The agreement outlines the Assignee's responsibilities regarding the collection and administration of the assigned accounts receivable. It may include guidelines on how the Assignor should continue invoicing its customers and how the Assignee should handle collections. 6. Confidentiality and Non-Compete: This provision protects the Assignor's confidential information and may include restrictions on the Assignor's ability to engage in similar factoring arrangements with other factors during the agreement's term. 7. Termination and Default: The agreement specifies the conditions under which either party can terminate the factoring arrangement, along with the consequences of default or breach of the agreement. Types of Cuyahoga Ohio General Form of Factoring Agreement — Assignment of Accounts Receivable: 1. Recourse Factoring Agreement: In this type of agreement, the Assignor retains the risk of non-payment, meaning they are financially responsible for any uncollectible accounts. The Assignee may seek reimbursement from the Assignor if the assigned accounts become uncollectible. 2. Non-Recourse Factoring Agreement: In a non-recourse arrangement, the Assignee assumes the risk of non-payment. If an assigned account becomes uncollectible due to the customer's insolvency or other specified circumstances, the Assignor is not required to reimburse the Assignee. These descriptions provide an overview of the Cuyahoga Ohio General Form of Factoring Agreement — Assignment of Accounts Receivable, highlighting its key provisions and different types found within the county.