How does assignment of accounts receivable differ from factoring?

Factoring is the sale of receivables, whereas invoice discounting ("assignment of accounts receivable" in American accounting) is a borrowing that involves the use of the accounts receivable assets as collateral for the loan.

What is a non-recourse receivables purchase agreement?

Under a non- recourse agreement7 the purchase price is payable at the expiry of an agreed period from the debt's due date8, if the debtor has not by then discharged the debt. The agreed period is typically (but not essentially) 90 to 180 days after such due date.

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Nonrecourse Assignment of Account Receivables

Bexar Texas Nonrecourse Assignment of Account Receivables

Name: Bexar Texas Nonrecourse Assignment of Account Receivables
Brand: US Legal Forms
Rating: 4.67 (266 reviews)

Category:

Loans and Lending - Accounts Receivables

State:

Multi-State

County:

Bexar

Control #:

US-0315BG

Format:

Instant download

Description

This form is a nonrecourse assignment of account receivables.

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Accounts receivable can be sold to a financial institution for a fee. This action is known as discounting or factoring accounts receivable. Accounts receivable can't be used as a negotiable financial instrument like note receivable.

Nonrecourse assignment The assignor bears no liability toward the assignee for payment and performance of the underlying debt in the event of default on the transaction, where most assignments provide the assignees no recourse to the assignor.

Factoring is the sale of receivables, whereas invoice discounting ("assignment of accounts receivable" in American accounting) is a borrowing that involves the use of the accounts receivable assets as collateral for the loan.

One form of transaction is "assignment without recourse," which means that once the loan is sold or transferred, neither the borrower nor the new loan holder can hold the original loan-maker liable for anything.

A sale that is "with recourse" means that the seller bears responsibility for the sold asset if it turns out to be defective or does not perform as expected. The buyer has the right to seek recourse from the seller, who is often obligated to offer a replacement of equal value or provide a refund.

Accounts receivable pledging occurs when a business uses its accounts receivable asset as collateral on a loan, usually a line of credit. When accounts receivable are used in this manner, the lender typically limits the amount of the loan to either: 70% to 80% of the total amount of accounts receivable outstanding; or.

Under a non- recourse agreement7 the purchase price is payable at the expiry of an agreed period from the debt's due date8, if the debtor has not by then discharged the debt. The agreed period is typically (but not essentially) 90 to 180 days after such due date.

Consolidated Accounts Receivable means the amount of all accounts receivable of the Borrower and its Subsidiaries less all reserves with respect thereto, including without limitation reserves for past due and doubtful accounts, determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis.

Assignment of accounts receivable is a lending agreement whereby the borrower assigns accounts receivable to the lending institution. In exchange for this assignment of accounts receivable, the borrower receives a loan for a percentage, which could be as high as 100%, of the accounts receivable.

Bexar Texas Nonrecourse Assignment of Account Receivables

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FAQ

Is an assignment of accounts receivable a negotiable instrument?

What is a non-recourse assignment?

How does assignment of accounts receivable differ from factoring?

What does it mean assigned without recourse?

What does assigned with recourse mean?

What does pledging accounts receivable mean?

What is a non-recourse receivables purchase agreement?

What is consolidation of accounts receivable?

What is assignment of account receivable?

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