Document background
The Accounts Receivable Financing Agreement is a vital financial instrument used when businesses seek to improve their working capital position by monetizing their accounts receivable. This agreement, structured under German law, enables companies to receive immediate funding against their outstanding invoices while potentially transferring collection risk to the financing institution. It is particularly relevant for businesses with significant B2B sales and lengthy payment terms. The document comprehensively addresses all aspects of the receivables purchase arrangement, including operational procedures, pricing mechanisms, and risk allocation. Key German legal requirements are incorporated, including specific provisions from the German Civil Code (BGB) regarding assignments, along with compliance requirements under German banking regulations (KWG) and commercial law (HGB). The agreement is designed to create a valid "true sale" of receivables that would be respected in the event of insolvency.
