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Accounts Receivable Financing Agreement Template for England and Wales

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Key Requirements PROMPT example:

Accounts Receivable Financing Agreement

"Need an Accounts Receivable Financing Agreement for my manufacturing company to finance up to £5 million in receivables, with specific provisions for international debtors in the EU and a requirement for credit insurance coverage."

What is a Accounts Receivable Financing Agreement?

The Accounts Receivable Financing Agreement is utilized when businesses seek to improve their working capital position by monetizing their accounts receivable. This document, governed by English and Welsh law, establishes the legal framework for companies to obtain immediate funding against their unpaid invoices. It's particularly relevant in situations where businesses have substantial receivables but require faster access to cash flow. The agreement covers crucial aspects including assignment mechanisms, funding limits, operational procedures, and compliance with UK financial regulations.

What sections should be included in a Accounts Receivable Financing Agreement?

1. Parties: Identifies and defines the financing party and the client company

2. Background: Sets out the context of the agreement and basic commercial understanding

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules

4. The Facility: Details of the financing arrangement, including limits and availability

5. Assignment of Receivables: Terms governing the transfer of receivables

6. Representations and Warranties: Standard and specific warranties about the business and receivables

7. Covenants: Ongoing obligations of the client company

8. Security: Details of any security arrangements

9. Events of Default: Circumstances constituting default and consequences

10. Fees and Charges: Financial terms including interest rates and fees

What sections are optional to include in a Accounts Receivable Financing Agreement?

1. Insurance: Required when specific insurance arrangements are needed for credit insurance coverage

2. Cross-Border Provisions: Specific provisions for handling international receivables and foreign debtors

3. Trust Arrangements: Provisions for holding funds in trust when required by specific jurisdictional requirements

4. Data Protection: Specific data handling requirements when personal data is involved in the receivables

What schedules should be included in a Accounts Receivable Financing Agreement?

1. Schedule of Receivables: List of initial receivables being assigned

2. Form of Notice to Debtors: Template notice informing debtors of the assignment

3. Eligibility Criteria: Detailed criteria for acceptable receivables

4. Fee Schedule: Detailed breakdown of all applicable fees and charges

5. Operating Procedures: Day-to-day procedures for managing the facility

6. Form of Assignment: Template for future assignments of receivables

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions








































Clauses






























Industries

Law of Property Act 1925: Fundamental legislation governing property rights and interests in England and Wales, relevant for security interests in receivables

Companies Act 2006: Key legislation governing company law, including registration requirements for charges and company administration

Insolvency Act 1986: Regulates insolvency proceedings and creditors' rights, crucial for determining priority and enforcement in case of debtor insolvency

Financial Services and Markets Act 2000: Primary legislation for financial services regulation, including requirements for regulated financing activities

Consumer Credit Act 1974: Governs consumer credit arrangements, applicable if dealing with consumer receivables

Sale of Goods Act 1979: Regulates sale of goods contracts, relevant for underlying transactions generating receivables

Bills of Sale Acts 1878 and 1882: Historical legislation still relevant for certain types of security over personal property

Financial Collateral Arrangements (No. 2) Regulations 2003: Specific regulations governing financial collateral arrangements and security interests

UK General Data Protection Regulation: Post-Brexit data protection regulation governing the processing of personal data

Data Protection Act 2018: UK's implementation of data protection requirements, crucial for handling personal data in receivables

Money Laundering Regulations 2017: Anti-money laundering requirements affecting financial transactions and due diligence

Proceeds of Crime Act 2002: Criminal law statute relevant for anti-money laundering compliance in financial transactions

Rome I Regulation: Determines applicable law in contracts with international elements, as retained in UK law post-Brexit

Value Added Tax Act 1994: Tax legislation relevant for VAT treatment of receivables and their assignment

Corporation Tax Act 2009: Tax legislation governing corporate tax implications of receivables financing

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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