The Accounts Receivable Financing Agreement is a vital financing instrument in the Nigerian business environment, designed to help companies improve their working capital position by monetizing their accounts receivable. This document is particularly useful for businesses with substantial receivables who need to access immediate funding without traditional loan arrangements. It comprehensively covers the relationship between the financing institution and the business, including detailed provisions for receivables assignment, collection mechanisms, and security arrangements. The agreement must comply with Nigerian financial regulations, particularly the Secured Transactions in Movable Assets Act 2017 and Central Bank of Nigeria requirements. It's commonly used by businesses seeking to maintain healthy cash flow while managing longer payment terms with their customers.

1. Parties: Identifies the financing party (typically a bank or financial institution) and the client (the business selling its receivables)

2. Background: Sets out the context of the agreement, including the client's business nature and desire to obtain financing against its receivables

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. The Facility: Details the nature and amount of the financing facility, including advance rates and limits

5. Assignment of Receivables: Specifies the terms and mechanism for assigning receivables to the financier

6. Eligibility Criteria: Establishes the criteria for receivables that can be financed under the agreement

7. Purchase Price and Payment Terms: Details the calculation of purchase price for receivables and payment mechanisms

8. Representations and Warranties: Sets out the client's representations regarding their business and the receivables

9. Covenants: Specifies ongoing obligations of the client throughout the agreement term

10. Collection and Payment Procedures: Details how receivables will be collected and payments processed

11. Events of Default: Lists circumstances constituting default and consequences thereof

12. Security: Details the security arrangements securing the client's obligations

13. Indemnification: Sets out the client's indemnification obligations

14. Fees and Expenses: Details all fees, charges, and expenses payable under the agreement

15. Term and Termination: Specifies the duration of the agreement and termination provisions

16. Governing Law and Jurisdiction: Establishes Nigerian law as governing law and specifies jurisdiction for disputes

17. Notices: Sets out how formal notices between parties should be given

18. Miscellaneous: Contains standard boilerplate provisions including severability, entire agreement, etc.