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Accounts Receivable Purchase Agreement

Accounts Receivable Purchase Agreement Template for Pakistan

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Key Requirements PROMPT example:

Accounts Receivable Purchase Agreement

"Need to draft an Accounts Receivable Purchase Agreement for a Pakistani textile manufacturer selling its receivables to ABC Bank Limited, with a facility limit of PKR 500 million and quarterly settlement periods, to be effective from March 1, 2025."

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Document background
The Accounts Receivable Purchase Agreement is a crucial financing instrument in Pakistan's business environment, enabling companies to monetize their accounts receivable and access immediate working capital. This document is typically used when businesses seek to improve their cash flow position without traditional borrowing, or when they want to transfer the credit risk of their receivables to a third party. The agreement must comply with Pakistani legal requirements, including the Contract Act 1872, Banking Companies Ordinance 1962, and relevant financial regulations. It details the purchase mechanism, pricing, risk allocation, operational procedures, and rights and obligations of all parties involved. The document is particularly relevant in scenarios where companies have substantial receivables from creditworthy customers and need to optimize their working capital cycle.
Suggested Sections

1. Parties: Identification of the Seller (original creditor) and Purchaser (factor/buyer) with full legal names and details

2. Background: Context of the transaction, nature of the Seller's business, and purpose of the agreement

3. Definitions: Comprehensive definitions including Eligible Receivables, Purchase Price, Cut-off Date, Collection Period, etc.

4. Purchase and Sale: Core transaction terms, including sale mechanism, true sale provisions, and pricing formula

5. Eligibility Criteria: Specific criteria that receivables must meet to be eligible for purchase

6. Purchase Price and Payment: Calculation method, payment timing, and any adjustments or reserves

7. Representations and Warranties: Seller's representations regarding receivables, business operations, and authority

8. Covenants: Ongoing obligations of both parties, including reporting and operational requirements

9. Collections and Servicing: Process for collecting receivables, remittance of collections, and servicing arrangements

10. Events of Default: Circumstances constituting default and consequences

11. Remedies: Rights and remedies available upon default or breach

12. Term and Termination: Duration of agreement, renewal provisions, and termination rights

13. Governing Law and Jurisdiction: Pakistani law as governing law and jurisdiction provisions

14. Miscellaneous: Standard boilerplate provisions including notices, amendments, and assignment

Optional Sections

1. Security Arrangements: Optional section for additional security or guarantees, used when credit enhancement is required

2. Foreign Exchange Provisions: Required when dealing with international receivables or cross-border transactions

3. Electronic Trading Platform: Needed when parties use an electronic platform for receivables trading

4. Credit Insurance: Include when receivables are covered by credit insurance

5. Backup Servicing: Required when a backup servicer is appointed for continuity

6. Islamic Finance Compliance: Required for Shariah-compliant receivables purchase structures

7. Data Protection: Detailed privacy provisions when dealing with sensitive customer information

8. Multilateral Netting: Used when multiple related entities are involved in cross-receivables arrangements

Suggested Schedules

1. Schedule 1 - Form of Purchase Notice: Standard form for offering receivables for purchase

2. Schedule 2 - Eligibility Criteria Details: Detailed list of criteria for acceptable receivables

3. Schedule 3 - Purchase Price Calculation: Detailed formula and examples of price calculation

4. Schedule 4 - Operational Procedures: Detailed procedures for daily operations and reporting

5. Schedule 5 - Form of Debtor Notification: Template for notifying debtors of the assignment

6. Schedule 6 - Approved Debtor List: List of pre-approved debtors whose receivables can be purchased

7. Appendix A - Required Reports: Templates and specifications for required reporting

8. Appendix B - System Specifications: Technical requirements for electronic interface if applicable

9. Appendix C - Service Level Agreement: Detailed service levels for collection and reporting

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

Trading

Technology

Telecommunications

Textile

Automotive

Pharmaceuticals

Construction

Energy

Retail

FMCG

Agriculture

Logistics

Healthcare

Relevant Teams

Legal

Finance

Treasury

Credit Control

Accounts Receivable

Risk Management

Operations

Commercial

Trade Finance

Corporate Banking

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Credit Controller

Accounts Receivable Manager

Legal Counsel

Commercial Director

Risk Manager

Working Capital Manager

Finance Manager

Corporate Banking Officer

Trade Finance Manager

Financial Controller

Business Development Manager

Operations Manager

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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