Legal Templates
Debt Factoring Agreement

Debt Factoring Agreement for Singapore

Debt Factoring Agreement Template for Singapore

A Debt Factoring Agreement under Singapore law is a commercial contract where a business (Client) sells its accounts receivable to a financial institution (Factor) at a discount. This agreement, governed by Singapore's legal framework including the Civil Law Act and Companies Act, establishes the terms for the purchase of receivables, including pricing, representations, warranties, and operational procedures. It incorporates specific provisions required under Singapore's financial regulations and MAS guidelines.

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What is a Debt Factoring Agreement?

The Debt Factoring Agreement is essential for businesses seeking to improve cash flow by monetizing their accounts receivable. This document, structured under Singapore law, establishes the legal framework for selling receivables to a factor, typically at a discount. It outlines crucial elements such as eligibility criteria, purchase price calculations, representations and warranties, and operational procedures. The agreement is particularly relevant in Singapore's dynamic business environment, where companies often require efficient working capital solutions while ensuring compliance with local financial regulations.

What sections should be included in a Debt Factoring Agreement?

1. Parties: Identification of the Factor and the Client (seller of receivables)

2. Background: Context of the agreement and brief description of the factoring arrangement

3. Definitions: Key terms including Receivables, Eligible Receivables, Purchase Price, Factor's Fee, etc.

4. Assignment of Receivables: Core provisions regarding the sale and assignment of receivables

5. Purchase Price and Payment Terms: Calculation method for purchase price and payment mechanisms

6. Representations and Warranties: Client's warranties regarding receivables and business conditions

7. Covenants: Ongoing obligations of the Client

8. Events of Default: Circumstances constituting default and consequences

9. Term and Termination: Duration and termination provisions

What sections are optional to include in a Debt Factoring Agreement?

1. Recourse Provisions: Terms for recourse against the Client in recourse factoring arrangements

2. Cross-Border Provisions: Specific terms for international receivables when dealing with international debtors

3. Credit Insurance: Terms relating to credit insurance arrangements when credit insurance is part of the agreement

4. Digital Platform Terms: Terms for use of electronic systems when using digital factoring platforms

What schedules should be included in a Debt Factoring Agreement?

1. Schedule of Receivables: List of initial receivables being assigned

2. Pricing Schedule: Detailed breakdown of fees and charges

3. Form of Notice to Debtors: Template for notifying debtors of the assignment

4. Operating Procedures: Detailed procedures for submission and processing of receivables

5. Eligible Receivables Criteria: Detailed criteria for acceptable receivables

6. Form of Assignment: Template for individual assignments of receivables

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Jurisdiction

Singapore

Publisher

Genie AI

Document Type

Financing Agreement

Sector

Capital Markets

Cost

Free to use
Relevant legal definitions
Acceptance
Account
Accounts Receivable
Advance Rate
Adverse Interest
Applicable Law
Assignment
Available Funds
Business Day
Charged Interest
Client
Collection Period
Commencement Date
Contract
Credit Note
Debtor
Debtor Limit
Deed of Assignment
Default Interest Rate
Dilution
Discount Charge
Discount Period
Dispute
Due Date
Eligible Receivable
Encumbrance
Event of Default
Factor
Factor's Fee
Factoring Documents
Facility
Facility Limit
Funding Date
Indebtedness
Ineligible Receivable
Initial Payment
Invoice
Material Adverse Change
Minimum Period
Notice of Assignment
Notification
Outstanding Amount
Purchase Price
Purchased Receivable
Recourse
Reserve
Security Interest
Service Charge
Term
Transfer
Working Day
Clauses
Assignment
Purchase and Sale
Representations and Warranties
Eligible Receivables
Purchase Price
Payment Terms
Collection and Servicing
Recourse
Security
Covenants
Record Keeping
Notifications
Events of Default
Remedies
Indemnification
Confidentiality
Data Protection
Anti-Money Laundering
Force Majeure
Term and Termination
Amendments
Assignment and Transfer
Notices
Governing Law
Dispute Resolution
Severability
Entire Agreement
Counterparts
Further Assurance
Third Party Rights
Costs and Expenses
Set-off
No Agency
Waiver
Insurance
Industries

Civil Law Act (Cap. 43): Primary legislation governing civil law matters in Singapore, including contract formation, enforcement, and remedies

Companies Act (Cap. 50): Regulates corporate entities and their operations, including requirements for business transactions and corporate obligations

Banking Act (Cap. 19): Governs banking operations and financial services, including regulations on credit facilities and financial transactions

Law of Property Act: Deals with property rights and the transfer of property interests, including the assignment of receivables

Civil Law (Assignment of Actionable Claims) Rules: Specific regulations governing the assignment of actionable claims and receivables

Securities and Futures Act: Regulates financial markets and securities, including certain aspects of financial instruments and trading

Monetary Authority of Singapore (MAS) Guidelines: Regulatory guidelines issued by MAS governing financial institutions and transactions

Financial Advisers Act: Regulates financial advisory services and related financial activities

Moneylenders Act: Governs lending activities and provides regulations for money lending businesses

Personal Data Protection Act (PDPA): Governs the collection, use, and disclosure of personal data in business transactions

Insolvency, Restructuring and Dissolution Act 2018: Provides framework for insolvency proceedings and debt restructuring, relevant for factoring agreements in case of debtor insolvency

Payment and Settlement Systems (Finality and Netting) Act: Regulates payment and settlement systems, including finality of transactions and netting arrangements

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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