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Future Receivables Factoring Agreement for the United Kingdom

Future Receivables Factoring Agreement Template for England and Wales

A Future Receivables Factoring Agreement is a financial arrangement governed by English and Welsh law, where a business sells its future receivables to a factor at a discount. The agreement outlines the terms of purchase, collection rights, representations and warranties, and operational procedures. It includes provisions for eligible receivables criteria, purchase price calculations, and risk allocation between the parties. The document is structured to comply with UK financial services regulations and includes necessary protections for both the factor and the client.

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Future Receivables Factoring Agreement

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What is a Future Receivables Factoring Agreement?

The Future Receivables Factoring Agreement is designed for businesses seeking to monetize their future receivables through factoring arrangements. This document, governed by English and Welsh law, establishes the framework for selling anticipated receivables before they arise, typically used by companies with predictable future income streams. It addresses key aspects including eligibility criteria, purchase price mechanisms, representations about the quality of receivables, and collection procedures. The agreement is particularly relevant in situations where businesses need to access working capital based on future revenue expectations, while providing legal certainty and protection for both the factor and the client.

What sections should be included in a Future Receivables Factoring Agreement?

1. Parties: Identification of factor and client

2. Background: Context of the agreement and business relationship

3. Definitions: Key terms used throughout the agreement including relevant legislation and regulatory references

4. Assignment Provisions: Terms of assignment of receivables, including compliance with Law of Property Act 1925

5. Purchase Price and Payment Terms: Pricing mechanism, payment details, and discount rates

6. Representations and Warranties: Client's confirmations about receivables, business, and regulatory compliance

7. Covenants: Ongoing obligations of the client including compliance with relevant regulations

8. Events of Default: Circumstances constituting breach and consequences

9. Termination: Agreement end provisions and post-termination obligations

What sections are optional to include in a Future Receivables Factoring Agreement?

1. Credit Insurance: Insurance arrangements for receivables when credit insurance is required

2. Collection Procedures: Specific collection arrangements when factor handles collections directly

3. Cross-Border Provisions: International receivables handling for cross-border factoring arrangements

4. Consumer Credit Provisions: Additional provisions when receivables involve consumer debt under Consumer Credit Act 1974

5. Anti-Money Laundering Compliance: Specific provisions for compliance with Money Laundering Regulations 2017

What schedules should be included in a Future Receivables Factoring Agreement?

1. Form of Notice of Assignment: Template notice to debtors regarding assignment of receivables

2. Eligible Receivables Criteria: Detailed requirements for acceptable receivables and compliance criteria

3. Fee Schedule: Detailed breakdown of all fees, charges, and discount rates

4. Operational Procedures: Day-to-day operational requirements and compliance procedures

5. Form of Debtor List: Template for listing approved debtors and credit limits

6. Regulatory Compliance Checklist: List of regulatory requirements and compliance procedures

Authors

Alex Denne

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

Jurisdiction

England and Wales

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions






































Clauses






























Industries

Law of Property Act 1925: Primary legislation governing the assignment of receivables and property rights. Critical for the legal framework of transferring receivables from one party to another.

Contracts Act 1999: Fundamental legislation governing the formation and enforcement of contracts in England and Wales, which forms the basis of the factoring agreement.

Sale of Goods Act 1979: Relevant when the underlying receivables are related to sale of goods transactions, defining rights and obligations in such sales.

Financial Services and Markets Act 2000: Key regulatory framework for financial services in the UK, establishing requirements for financial activities including factoring services.

FCA Regulations: Regulatory requirements set by the Financial Conduct Authority, particularly relevant if the factor is a regulated entity.

Money Laundering Regulations 2017: Compliance requirements for due diligence and Know Your Customer (KYC) obligations in financial transactions.

Consumer Credit Act 1974: Legislation governing consumer credit arrangements, applicable if the receivables involve consumer debt.

Late Payment of Commercial Debts (Interest) Act 1998: Legislation governing interest charges on late payments in commercial transactions.

Insolvency Act 1986: Critical legislation regarding the treatment of assignments and security interests in insolvency scenarios.

Companies Act 2006: Corporate legislation defining requirements for company authority and execution of documents, relevant for corporate parties to the agreement.

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, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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