Factoring As A Continuing Agreement

Factoring is different from a receivables financing contract in that the subsequent receivable is used as collateral for a loan, but the actual ownership of the receivables and the right to recovery are not transferred until the loan and related interest are paid in a timely manner. Racey Cohn has been offering agreement structuring and other business advice and advice for major financial institutions for over 20 years. It reviewed, designed and negotiated documentation relating to multi-million dollar credit transactions, including factoring contracts; asset-base agreements; licensing agreements; asset and share purchase contracts; forbearance agreements, cash guarantees and share guarantee agreements; partnership, partnership and partnership agreements; public and private seizures; abandonment of the lessor and storage; guarantees; and real estate security. Factoring is a daily occurrence in the construction industry due to the long payment cycles that can span 120 days and beyond. However, the construction industry has characteristics that are risky for factoring companies. Due to the risks and exposure of pawn mechanics, the risk of paid-when-paid conditions, the existence of progress notes, the use of holdbacks, and exposure to business cycles, most “generalist” factoring companies avoid construction requirements altogether. This has created another niche of factoring companies specializing in construction claims. [36] Non-recourse factoring should not be confused with credit. [13] [1] When a lender decides to grant a loan to a business based on assets, cash flow and credit history, the borrower must acknowledge a liability to the lender and the lender acknowledges the borrower`s promise to repay the loan as an asset.

[13] [1] Non-recourse factoring is a sale of a financial asset in which the factor takes possession of the asset and all associated risks and the seller renounces all ownership of the asset sold. [13] [1] An example of factoring is the credit card. Factoring is like a credit card where the bank (postman) buys the customer`s debt without resorting to the seller; If the buyer does not pay the amount to the seller, the bank cannot ask the seller or merchant for the money, just as, in this case, the bank can only demand the money from the issuer of the debt. [18] Factoring is different from accounting discounting, which generally does not mean informing the issuer of the assignment of debts, while in the case of factoring, the debt issuer is usually notified in what is known as notification factoring. . . .