The Debt Factoring Agreement is a crucial financial instrument used in New Zealand when businesses seek to improve their working capital position by selling their accounts receivable to a specialized financial institution. This agreement is particularly relevant in situations where companies need immediate access to cash flow rather than waiting for customer payments, or where they want to outsource their debtor management. The document comprehensively covers the mechanics of receivables assignment, pricing structures, operational procedures, and risk allocation, all while ensuring compliance with New Zealand's financial services regulations, including the Financial Service Providers (Registration and Dispute Resolution) Act 2008 and related legislation. It's commonly used across various industries where businesses have significant accounts receivable and need efficient working capital management solutions.
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1. Parties: Identifies the factor and the client company
2. Background: Sets out the context of the agreement, including the client's business and desire to factor receivables
3. Definitions and Interpretation: Defines key terms and interpretation rules for the agreement
4. Appointment and Scope: Establishes the factor's appointment and the scope of factoring services
5. Assignment of Receivables: Details the mechanism and terms for assigning receivables to the factor
6. Purchase Price and Payment Terms: Specifies how purchase price is calculated and payment mechanisms
7. Client Warranties and Representations: Sets out client's warranties regarding the receivables and business
8. Factor's Rights and Obligations: Details the factor's rights in collecting debts and managing the relationship
9. Client's Ongoing Obligations: Specifies client's continuing obligations regarding debt management and reporting
10. Collection and Management of Receivables: Procedures for collecting and managing assigned receivables
11. Security and Charge: Details any security interests granted to the factor
12. Fees and Charges: Comprehensive breakdown of all fees and charges
13. Default and Consequences: Defines events of default and their consequences
14. Termination: Provisions for termination and post-termination procedures
15. General Provisions: Standard boilerplate clauses including notices, amendments, governing law
1. Recourse Provisions: Required for recourse factoring arrangements where the client retains credit risk
2. Credit Insurance: Include when credit insurance is required or provided
3. Cross-Border Provisions: Required when factoring involves international receivables
4. Trust Account Arrangements: Include when separate trust accounts are required for collections
5. Electronic Trading Platform: Include when factoring services are provided through an electronic platform
6. Confidentiality and Data Protection: Detailed section required when handling sensitive commercial or personal data
7. Parent Company Guarantee: Include when additional security through parent company is required
1. Schedule 1 - Eligibility Criteria: Criteria for acceptable receivables
2. Schedule 2 - Fee Schedule: Detailed breakdown of all fees, charges, and discount rates
3. Schedule 3 - Operational Procedures: Detailed procedures for submission, verification, and management of receivables
4. Schedule 4 - Form of Notice of Assignment: Template notice to be sent to debtors
5. Schedule 5 - Approved Debtors: List of pre-approved debtors and their credit limits
6. Schedule 6 - Required Reports: Ƶ and requirements for regular reporting
7. Schedule 7 - Power of Attorney: Form of power of attorney for debt collection
8. Appendix A - Collection Procedures: Detailed procedures for debt collection
9. Appendix B - Required Documents: List and formats of required supporting documents
Authors
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Wholesale Trade
Retail
Construction
Transportation and Logistics
Professional Services
Healthcare
Technology
Agriculture
Export and Import
Telecommunications
Industrial Services
Relevant Teams
Finance
Legal
Treasury
Credit Control
Accounts Receivable
Risk Management
Operations
Compliance
Commercial
Collections
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Credit Controller
Accounts Receivable Manager
Commercial Director
Financial Controller
Risk Manager
Operations Manager
Credit Risk Analyst
Legal Counsel
Compliance Officer
Business Development Manager
Relationship Manager
Collections Manager
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