The Debt Factoring Agreement serves as the primary legal framework for factoring transactions in the Philippines, enabling businesses to obtain immediate working capital by selling their accounts receivable to a financial institution. This document is essential when a business seeks to improve its cash flow through factoring while ensuring compliance with Philippine regulations, including the Securities Regulation Code, Banking Laws, and relevant BSP circulars. The agreement covers crucial elements such as purchase price mechanisms, risk allocation, collection procedures, and security arrangements, while incorporating specific Philippine law requirements regarding assignments, notices, and regulatory compliance. It is particularly relevant for businesses seeking alternative financing solutions and financial institutions expanding their factoring services in the Philippine market.
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1. Parties: Identification of the Factor and the Client (Supplier)
2. Background: Context of the agreement and business relationship
3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and interpretation rules
4. Purchase of Receivables: Core provisions regarding the sale and purchase of receivables
5. Purchase Price and Payment Terms: Calculation of purchase price, advance rate, reserves, and payment mechanics
6. Eligibility Criteria: Criteria for receivables to qualify for purchase
7. Client Representations and Warranties: Client's representations regarding business, receivables, and authority
8. Factor's Rights and Obligations: Factor's core responsibilities and rights under the agreement
9. Client's Covenants: Ongoing obligations of the Client
10. Collection and Application of Receivables: Process for collecting and applying payments from debtors
11. Security Interests: Security arrangements supporting the factoring relationship
12. Events of Default: Circumstances constituting default and consequences
13. Termination: Terms for ending the agreement and post-termination obligations
14. Indemnification: Mutual indemnification provisions
15. Confidentiality: Protection of confidential information
16. Governing Law and Jurisdiction: Choice of Philippine law and jurisdiction provisions
17. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment
1. Credit Insurance: Provisions regarding credit insurance arrangements when receivables are insured
2. International Factoring Provisions: Additional provisions for cross-border factoring transactions
3. Electronic Trading Platform: Provisions for using electronic platforms for receivables trading
4. Debtor Notification: Specific provisions regarding notification to debtors of the assignment
5. Reserve and Retention Amounts: Detailed provisions for maintaining reserves when required
6. Recourse Provisions: Specific provisions when recourse factoring is chosen
7. Industry-Specific Provisions: Special provisions for specific industries (e.g., construction, government contracts)
1. Schedule 1 - Eligible Receivables Criteria: Detailed criteria for receivables eligibility
2. Schedule 2 - Approved Debtors: List of approved debtors and their credit limits
3. Schedule 3 - Fees and Charges: Detailed breakdown of all fees and charges
4. Schedule 4 - Operational Procedures: Detailed procedures for submission and processing of receivables
5. Schedule 5 - Form of Notice of Assignment: Template for notifying debtors of the assignment
6. Schedule 6 - Required Documents: List of required supporting documents for receivables
7. Schedule 7 - Reporting Requirements: Forms and timing for regular reporting
8. Schedule 8 - Power of Attorney: Form of power of attorney for collection purposes
9. Appendix A - Compliance Requirements: Specific Philippine regulatory compliance requirements
10. Appendix B - Forms of Security Documents: Ƶ for security documents required under Philippine law
Authors
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Wholesale Trade
Retail
Construction
Technology
Healthcare
Telecommunications
Transportation and Logistics
Textiles
Agriculture
Food and Beverage
Professional Services
Relevant Teams
Finance
Treasury
Legal
Compliance
Credit Control
Operations
Risk Management
Commercial
Accounts Receivable
Collections
Business Development
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Credit Manager
Accounts Receivable Manager
Financial Controller
Risk Manager
Commercial Director
Legal Counsel
Compliance Officer
Operations Manager
Business Development Manager
Credit Analyst
Collections Manager
Finance Manager
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