The agreement should clearly specify the terms of the sale of the account receivables and the factoring fee payable to the factoring company. The amount to be paid during the invoice transfer and billing plans must also be defined. In general, factoring contracts have a clause that refers to the actions to be taken when a contracting party to the agreement violates the terms of the above agreement. A compromise clause is present in most agreements and stipulates that if a clause of the agreement is violated or if a dispute arises with respect to the terms of the agreement, the matter will be settled by arbitration. The clause mentions where the arbitration will take place, that is, the seat of arbitration, the language in which the proceedings are conducted and the manner in which arbitrators are appointed. Note that the factoring company (buyer) may, in the above clause, require you to redeem the invoice (the “account purchased”) on request – even if your customer has become insolvent, refuses to pay or pay late. It may be helpful to ensure that you fully understand the terms of your agreement in order to avoid early termination. The contract will describe all the conditions of early termination and provide details of notice times and fees required – so read the fine print carefully to determine what you should do next. If necessary, you can seek professional advice by contacting us to better understand these conditions if you are not sure of any of them.
Once you understand the terms of your factoring agreement, you are good at starting negotiations to terminate the agreement prematurely. In negotiations, it is a good starting point to collect quotes from competitors – especially if your dispute is about the fact that the third party`s share is too high. This market is competitive, so if you can prove that you have several better options from different companies, it may be possible to change your contract. This article is not designed as legal advice. This article is only an informative and hypothetical article with examples of language of appeal compared to a sample of non-recourse agreements.