Document background
The Accounts Receivable Financing Agreement serves as the primary document governing the sale or financing of accounts receivable in the United States. This agreement is particularly valuable for businesses seeking to improve cash flow without traditional bank loans. It establishes the legal framework for either factoring (sale of receivables) or asset-based lending (using receivables as collateral), depending on the structure. The document must comply with UCC Article 9, federal lending regulations, and state-specific requirements. It typically includes detailed provisions for eligibility criteria, purchase price calculations, representations and warranties, and operational procedures for ongoing financing.
