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Factoring Agreement

Factoring Agreement Template for New Zealand

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Key Requirements PROMPT example:

Factoring Agreement

"I need a Factoring Agreement for my manufacturing company based in Auckland, where we want to factor our receivables up to NZD 5 million with a 75% advance rate and 90-day payment terms, including recourse provisions if debtors don't pay within 120 days."

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Document background
This Factoring Agreement template is designed for use in New Zealand when a business seeks to improve its working capital position by selling its accounts receivable to a financial institution. The document comprehensively addresses the requirements of New Zealand's financial services and commercial law framework, including compliance with the Contract and Commercial Law Act 2017 and Personal Property Securities Act 1999. It's particularly suitable for businesses with regular trade receivables seeking immediate access to funds, while providing the factor with necessary security and operational controls. The agreement includes detailed provisions for receivables eligibility, purchase price calculations, representations and warranties, operational procedures, and risk allocation between parties.
Suggested Sections

1. Parties: Identifies the factor and the client (seller of receivables), including their legal names, addresses, and company registration details

2. Background: Sets out the context of the agreement, explaining that the client wishes to sell its receivables and the factor wishes to purchase them

3. Definitions: Defines key terms used throughout the agreement, including 'Receivables', 'Eligible Receivables', 'Purchase Price', 'Advance Rate', etc.

4. Purchase and Sale of Receivables: Core provisions detailing the assignment and transfer of receivables, including the true sale nature of the transaction

5. Purchase Price and Payment Terms: Specifies how the purchase price is calculated, advance rates, reserves, and payment mechanisms

6. Eligibility Criteria: Defines the criteria for receivables to be eligible for purchase under the agreement

7. Representations and Warranties: Client's representations regarding their business, receivables, and authority to enter into the agreement

8. Covenants: Ongoing obligations of the client, including reporting requirements and operational covenants

9. Collection and Servicing: Procedures for collecting receivables, including notification to debtors and handling of payments

10. Events of Default: Circumstances constituting default and their consequences

11. Termination: Provisions for ending the agreement, including termination events and consequences

12. General Provisions: Standard boilerplate clauses including governing law, notices, amendments, and assignment

Optional Sections

1. Credit Insurance: Required when receivables are covered by credit insurance, detailing requirements and procedures

2. Electronic Trading Platform: Needed when the parties use an electronic platform for receivables submission and trading

3. Cross-Border Provisions: Required for international factoring arrangements, addressing currency conversion and country-specific requirements

4. Debtor Credit Limits: Used when the factor sets specific credit limits for individual debtors

5. Asset-Based Lending Facility: Included when the factoring is part of a broader asset-based lending arrangement

6. Priority and Subordination: Required when there are other creditors with security interests in the receivables

7. Special Industries Provisions: Specific provisions for particular industries (e.g., construction, healthcare) with unique receivables characteristics

Suggested Schedules

1. Schedule 1 - Eligible Receivables Criteria: Detailed list of criteria for receivables to be eligible for purchase

2. Schedule 2 - Fee Schedule: Detailed breakdown of all fees, charges, and discount rates

3. Schedule 3 - Form of Notice of Assignment: Template for notifying debtors of the assignment of receivables

4. Schedule 4 - Operational Procedures: Detailed procedures for submission, verification, and purchase of receivables

5. Schedule 5 - Reporting Requirements: Forms and templates for required regular reporting

6. Schedule 6 - Excluded Debtors: List of debtors whose receivables are excluded from the agreement

7. Schedule 7 - Collection Procedures: Detailed procedures for collection of receivables

8. Appendix A - Power of Attorney: Form of power of attorney for factor to collect receivables

9. Appendix B - Debtor Notification Forms: Templates for various communications with debtors

Authors

Alex Denne

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

alex.den.21@genieai.co
Relevant legal definitions













































Clauses



































Relevant Industries

Manufacturing

Wholesale Trade

Retail

Construction

Professional Services

Transportation and Logistics

Healthcare

Technology

Agriculture

Export/Import

Textiles

Food and Beverage

Industrial Equipment

Relevant Teams

Finance

Treasury

Legal

Credit Control

Accounts Receivable

Operations

Risk Management

Compliance

Commercial

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Credit Controller

Accounts Receivable Manager

Financial Controller

Commercial Director

Operations Manager

Legal Counsel

Risk Manager

Working Capital Manager

Business Development Manager

Relationship Manager

Credit Risk Analyst

Compliance Officer

Industries








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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