As a method of raising capital or collecting cash, a company may sell their customer's debt owed to them by transferring their Accounts Receivable to another party in exchange for a payment of some kind. The first paragraph of a Receivables Transfer Agreement should define the accounts receivable that will be assigned. Typically more than one account will be assigned, and if there are several, the accounts should be listed on an attachment and referred to here. Be sure to "incorporate by reference" the attachment with the list of accounts. Also be sure to list all relevant information about the account or accounts, such as the company's name, the date the account was opened, and the outstanding balance.
The next section should provide the language of the transfer. Here, it is critical that the transferor "certify" that the accounts and just, due and collectable. For instance, this paragraph could read something like:
"For Value Received, all right, title, and interest in and to the accounts receivable ("the Accounts") are hereby assigned, sold, and transferred by the Transferor to the Transferee. The Transferor certifies that said accounts are just and due and that payment has not been received for those accounts or any part of them."
Naturally, the transferee must agree to pay the transferor a certain amount of money in exchange for receiving the right to collect on these accounts receivable. This payment could be a lump sum cash payment, stock transfer or other method, depending on the nature of the transaction. In addition, in order to limit its liability, the transferee will want the transferor to "indemnify and hold harmless" the transferee from any and all claims arising from the accounts receivable or the underlying contracts between the transferor and the customer. The transferor must also agree to furnish the transferee with all information required and necessary for its collection efforts. The transferor must agree to notify the customer of the transfer agreement by and between transferor and transferee and instruct all customers to pay transferee any payments on the accounts that are made.
Lastly, important consideration should be paid to the assignment provision, which may or may not provide the parties with the right to assign or transfer, directly or indirectly its rights and obligations under the agreement. For various reasons, it may be wise for both parties to require that they receive written permission from the other party before the other party transfers or assigns the agreement to a third party. This isn't really an issue for the transferor, who won't be assigning the agreement because they have already received their payment up front. However, the transferee may wish to retain the right to transfer the accounts receivable to a third-party, and the transferor may want to retain the right to approve such a transfer.
Finally, the typical general provisions should be included, explaining issues such as notice, assignment, legal remedies, waiver, severability, governing law, modifications and amendments to the Receivables Transfer Agreement.
- Related Videos
- Related Articles
- Ask / Related Q&A
- Do You Know What to Look For in an Honest Unlimited Free Downloads Site?
- Free Download for Scrapbooking Helps to Expand your Creativity
- EMule Free Download - Enjoy Emule Free Download!
- The Free Downloads
- Avast Free Download
- Free Downloads - the Good and the Bad
- Your Search for Free Downloadable Mobile Phone Games Ends Here
- Popular Music Free Downloads - Its Never That Easy




Hillsborough County Court Records - Hillsborough County Criminal Records
By: David Elliott | 16/11/2009Hillsborough County Criminal & Court Records are now available online. If you want to find Hillsborough County Court Records or Hillsborough County Criminal Records, you need to read this article. Hillsborough County Court Records - Hillsborough County Criminal Records:
Lancaster County Court Records - Lancaster County Criminal Records
By: David Elliott | 16/11/2009Lancaster County Criminal & Court Records are now available online. If you want to find Lancaster County Court Records or Lancaster County Criminal Records, you need to read this article. Lancaster County Court Records - Lancaster County Criminal Records:
Wake County Court Records - Wake County Criminal Records
By: David Elliott | 16/11/2009Wake County Criminal & Court Records are now available online. If you want to find Wake County Court Records or Wake County Criminal Records, you need to read this article. Wake County Court Records - Wake County Criminal Records:
Harris County Court Records - Harris County Criminal Records
By: David Elliott | 16/11/2009Harris County Criminal & Court Records are now available online. If you want to find Harris County Court Records or Harris County Criminal Records, you need to read this article. Harris County Court Records - Harris County Criminal Records:
Alameda County Court Records - Alameda County Criminal Records
By: David Elliott | 16/11/2009Alameda County Criminal & Court Records are now available online. If you want to find Alameda County Court Records or Alameda County Criminal Records, you need to read this article. Alameda County Court Records - Alameda County Criminal Records:
Nueces County Court Records - Nueces County Criminal Records
By: David Elliott | 16/11/2009Nueces County Criminal & Court Records are now available online. If you want to find Nueces County Court Records or Nueces County Criminal Records, you need to read this article. Nueces County Court Records - Nueces County Criminal Records:
San Bernadino County Court Records - San Bernadino County Criminal Records
By: David Elliott | 16/11/2009San Bernadino County Criminal & Court Records are now available online. If you want to find San Bernadino County Court Records or San Bernadino County Criminal Records, you need to read this article. San Bernadino County Court Records - San Bernadino County Criminal Records:
Gwinnett County Court Records - Gwinnett County Criminal Records
By: David Elliott | 16/11/2009Gwinnett County Criminal & Court Records are now available online. If you want to find Gwinnett County Court Records or Gwinnett County Criminal Records, you need to read this article. Gwinnett County Court Records - Gwinnett County Criminal Records:
Do Electric Cars Save Money?
By: Mark Warner | 06/11/2008 | AutomotiveWith the economy in a state and fuel prices rising, many people are turning towards purchasing an electric car. The real question is whether electric cars can actually save you money. Unfortunately, the answer really depends on the individual car owner. Let's start by discussing the technology involved. When individuals say...
Water to Gas Conversion - Fact or Fiction?
By: Mark Warner | 06/11/2008 | AutomotiveThere are many ideas swimming around that you could potentially run your car on water, and as gas prices continue to rise, the idea is more appealing to vehicle owners than ever before. There is a lot of hype about "Brown's Gas", or hydroxy gas, used to power vehicles. The...
How Much Will You Make With an MBA?
By: Mark Warner | 31/10/2008 | EducationIf you are like thousands of other students out there, you are considering getting your MBA or Masters in Business Administration. While we all have our own unique motivations for getting the degree of our choice, the amount of money we'll be making with our degrees is usually of paramount...
What is a Registration Rights Agreement?
By: Mark Warner | 18/09/2008 | LawIn the United States, shares must be registered with the SEC before they can be sold to the public. In turn, it is impossible to register shares without the company preparing a registration statement and, along with a prospectus, filing said statement with the Securities Exchange Commission. The right to...
How To Construct A Receivables Transfer Agreement
By: Mark Warner | 14/09/2008 | LawAs a method of raising capital or collecting cash, a company may sell their customer's debt owed to them by transferring their Accounts Receivable to another party in exchange for a payment of some kind. The first paragraph of a Receivables Transfer Agreement should define the accounts receivable that will...
Intellectual Property Agreement
By: Mark Warner | 13/09/2008 | LawAn Intellectual Property Agreement ("IP Agreement"), also called an Intellectual Property Transfer Agreement or Intellectual Property Assignment Agreement, consummates and formalizes an agreement between two companies for the purchase and sale of intellectual property rights. The Intellectual Property being purchased can consist of copyrights, trademarks, moral rights, and/or patents. (Moral...
What Are Employee Retention Agreements?
By: Mark Warner | 07/09/2008 | LawAn Employee Retention Agreement is a legal contract entered into by an employer and a key employee whose services the company desires to retain. When employees know that their company might be acquired, they understand that their employment security may be in danger. In these situations, companies who want to...