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Enter the full legal name of this party exactly as it appears on their ID or business registration.
Enter the full legal name of this party exactly as it appears on their ID or business registration.
An Invoice Factoring Agreement is the contract by which a business (the 'client') sells its accounts receivable (outstanding invoices) to a factoring company (the 'factor') at a discount, in exchange for immediate cash. Unlike a bank loan, factoring is not debt — the factor purchases the receivables and assumes the credit risk on the purchased invoices. The factor typically advances 70–90% of the invoice face value immediately and remits the balance (the 'reserve') minus the factoring fee when the customer pays. Key provisions: advance rate, factoring fee, recourse vs. non-recourse (who bears the risk of customer non-payment), and notification to customers. Fill out this free invoice factoring agreement template online, e-sign it digitally, and download a legally valid PDF. no account or lawyer needed. Sections: Parties, Factoring Terms.
This Invoice Factoring Agreement (the "Agreement") is entered into as of ______________ by and between ______________, located at ______________ (the "Factor"), and ______________, located at ______________ (the "Client").
Client agrees to offer to sell to Factor, and Factor agrees to purchase from Client (in Factor's sole discretion), eligible accounts receivable arising from Client's sale of goods or services (the "Purchased Receivables"). Each sale of Receivables shall be a true sale and absolute assignment of the Purchased Receivables to Factor. Client retains no interest in Purchased Receivables after sale. Eligible invoices: ______________.
Upon Factor's acceptance of an invoice, Factor shall advance to Client 85% of the face value of the Purchased Receivable (the "Advance"). The remaining balance (the "Reserve") shall be remitted to Client within 3 business days after Factor's collection of the full invoice amount from the customer, less the Factoring Fee and any other applicable charges.
Client shall pay Factor a factoring fee of 3% of the face value of each Purchased Receivable (the "Factoring Fee"). The Factoring Fee shall be deducted from the Reserve upon collection. If a purchased invoice remains unpaid beyond the agreed terms, additional fees may apply as set forth in Factor's fee schedule.
This Agreement is LIMITED RECOURSE. Factor assumes credit risk on Purchased Receivables for 90 days. If a customer fails to pay within 90 days of the invoice due date, the Receivable shall be repurchased by Client at the Advance amount.
______________. Client shall maintain a lockbox or segregated account into which all customer payments are deposited, and shall remit all collections on Purchased Receivables to Factor within 2 business days of receipt. Client agrees not to direct customers to change payment instructions that may interfere with Factor's collections.
With respect to each Purchased Receivable, Client warrants that: (a) the goods or services giving rise to the invoice have been delivered or performed; (b) the invoice is not subject to any dispute, credit, offset, or counterclaim; (c) Client has good and marketable title to the Receivable, free of any lien; and (d) the customer is a creditworthy business entity.
This Agreement commences on ______________ for an initial term of 12 months, renewing monthly thereafter unless terminated on 60 days' written notice. Upon termination, all outstanding obligations, including any recourse obligations, shall survive.
This Agreement shall be governed by and construed in accordance with the laws of the State of ______________, without regard to its conflict-of-laws principles.