💡 Summary #
The Factoring & Security Agreement is the core contract between your business and Factor & Fund.
It outlines how invoices are purchased, how funds are advanced, and how payments are handled — keeping everything clear, compliant, and transparent.
⚙️ What the Agreement Covers #
1. The Basics #
The agreement states that:
- Factor & Fund purchases your accounts receivable (invoices) for a small fee.
- You receive an advance (up to 90%) immediately.
- When your buyer pays Factor & Fund, the remaining reserve is released to you (minus fees).
This ensures fast cash flow without creating debt.
2. Advance and Reserve Structure #
- Advance: The initial amount you receive (usually 70–95% of invoice value).
- Reserve: The balance held until the buyer pays in full. In some cases, you might be required to hold a reserve amount for a while or for the duration of our business.
- Fee: A small percentage per 30-day payment cycle (e.g., 3% per 30 days).
| Example | Amount |
|---|---|
| Invoice value | $100,000 |
| Advance (90%) | $90,000 |
| Reserve | $10,000 |
| Fee (3%) | $3,000 |
| Final release | $7,000 |
3. Notification of Assignment (NOA) #
This clause authorizes Factor & Fund to notify your buyer (debtor) to send payments directly to our controlled account.
It ensures:
- Payments are tracked correctly.
- Funds are applied only to your approved invoices.
- You remain fully transparent with your customers.
🟦 The NOA protects both your business and Factor & Fund from misdirected payments.
4. Security Interest #
The agreement gives Factor & Fund a security interest in the invoices you sell.
This allows us to file a UCC-1 statement showing that those receivables are pledged until fully paid.
It’s a standard legal safeguard, not a lien on your entire business.
5. Representations & Warranties #
You confirm that:
- Invoices are valid, undisputed, and for completed work.
- Buyers have received goods or services.
- No other party has rights to those invoices.
These assurances protect against fraud or duplicate funding.
6. Duration & Termination #
- No long-term lock-in contracts – you can spot factoring or long term contract.
- Termination requires all open invoices to be paid in full.
- Upon closure, the UCC filing is released immediately.
✅ Your Responsibilities #
- Submit accurate invoices and buyer details.
- Notify Factor & Fund if your customer disputes payment.
- Forward any misdirected payments immediately.
Compliance with these terms keeps funding smooth and uninterrupted.
❓ FAQ #
Is this a loan agreement?
No. It’s a sale of receivables – you’re not borrowing or incurring debt.
What if my buyer sends payment to me by mistake?
Simply forward it to Factor & Fund right away so it can be applied correctly.
Can I review the agreement before signing?
Yes. You’ll receive the full document via eSign and can request clarification anytime before signing.
