Document background
The Accounts Receivable Purchase Agreement is a crucial financing instrument used in Saudi Arabia when companies seek to monetize their receivables and improve their working capital position. This document is typically employed when a company wishes to sell its accounts receivable to a financial institution at a discount, thereby receiving immediate cash rather than waiting for customer payments. The agreement must be carefully structured to comply with Saudi Arabian law and Sharia principles, particularly regarding the treatment of interest and uncertainty. It includes detailed provisions for the transfer of receivables, risk allocation, collection procedures, and regulatory compliance. This type of agreement is particularly relevant in the current Saudi business environment where companies are increasingly seeking alternative financing solutions that align with Islamic finance principles while supporting business growth objectives.
