Accounts Receivable Assignment Agreement Template for Australia

An Accounts Receivable Assignment Agreement is a legal document that transfers ownership rights in accounts receivable from the original creditor (assignor) to another party (assignee). Under United States law, these agreements are primarily governed by UCC Article 9, which provides the framework for secured transactions and establishes requirements for valid assignments of receivables.

When do you need this document?

You need an Accounts Receivable Assignment Agreement when your business wants to convert outstanding invoices into immediate cash flow. This commonly occurs in factoring arrangements where you sell receivables to a factoring company at a discount for immediate payment. Asset-based lenders also require these agreements when using your receivables as collateral for loans. If you're entering into a securitization transaction where receivables are pooled and sold to investors, this agreement establishes the legal foundation. Additionally, businesses undergoing mergers, acquisitions, or restructuring often use these agreements to transfer receivable portfolios between entities.

Key legal considerations

Several critical legal elements must be addressed in your agreement to ensure enforceability and protect your interests. The assignment clause must clearly identify which specific receivables are being transferred, including detailed schedules with debtor names, amounts, and due dates. Your representations and warranties section should cover the validity and collectibility of the receivables, confirming they're free from disputes and properly documented. Consider including recourse provisions that specify whether you remain liable if debtors fail to pay. The agreement should address notification procedures for informing account debtors about the assignment, as proper notification affects the assignee's rights to collect directly. Include provisions for handling collections, dispute resolution, and the treatment of returns or credits that may arise after assignment.

Legal requirements in United States

Under UCC Article 9, your assignment must meet specific requirements for validity and perfection. The agreement must be in writing and clearly describe the receivables being assigned to satisfy the statute of frauds. For perfection against third parties, you may need to file UCC-1 financing statements in the appropriate state offices, depending on your jurisdiction and the nature of the receivables. When government receivables are involved, the Federal Assignment of Claims Act imposes additional requirements, including written notice to the contracting agency. Consumer receivables assignments must comply with the Fair Debt Collection Practices Act and Consumer Credit Protection Act, which limit assignment terms and collection practices. State laws may impose additional notification requirements, particularly regarding informing debtors of the assignment. Some states require specific language in assignment agreements or impose waiting periods before assignments become effective.