Factoringovereenkomst
Factoring Agreement
A factoring agreement is a contract under which a company assigns its receivables from its debtors to a factoring company in exchange for immediate payment.
A factoring agreement is an agreement under which a company sells or assigns its outstanding receivables to a factor. The factor typically advances a portion of the value of the receivables and assumes responsibility for their collection and, frequently, for the associated credit risk.
This type of agreement is relevant to companies seeking to enhance their liquidity without awaiting the expiry of customer payment terms. In practice, factoring is commonly used by SMEs in sectors characterised by extended payment periods, such as construction, wholesale trade and transport, and may also encompass debtor management.
“The company entered into a factoring agreement to strengthen its cash flow and to have the receivables collected directly by the factor.”
Related terms
Need legal advice?
Schedule a free consultation with one of our specialists