The Debt Factoring Agreement is essential for businesses seeking to improve their working capital position by monetizing their accounts receivable. Used extensively in South Africa's commercial financing sector, this agreement establishes the legal framework for a Factor to purchase a Client's receivables at a discount, providing the Client with immediate access to working capital. The document comprehensively addresses operational procedures, compliance requirements under South African financial services legislation, risk allocation, and ongoing obligations of all parties. It is particularly relevant in scenarios where businesses need to maintain steady cash flow without taking on traditional debt, while ensuring proper protection for both the Factor and Client in accordance with South African law.

1. Parties: Identifies the Factor and the Client, including their full legal names, registration numbers, and registered addresses

2. Background: Sets out the context of the agreement - that the Client wishes to sell its receivables and the Factor wishes to purchase them

3. Definitions and Interpretation: Defines key terms used in the agreement including 'Receivables', 'Eligible Receivables', 'Purchase Price', 'Discount Rate', etc.

4. Sale and Purchase of Receivables: Core provisions regarding the sale and assignment of receivables, including the true sale nature of the transaction

5. Purchase Price and Payment Terms: Details how the purchase price is calculated, including discount rates, reserves, and payment mechanisms

6. Eligibility Criteria: Specifies the criteria that receivables must meet to be eligible for purchase

7. Representations and Warranties: Client's representations regarding its business, the receivables, and its authority to sell them

8. Client Undertakings: Ongoing obligations of the Client regarding its business operations and the receivables

9. Operating Procedures: Day-to-day procedures for offering and purchasing receivables, including documentation requirements

10. Collections and Payments: Procedures for collecting receivables and handling payments from debtors

11. Events of Default: Circumstances constituting default and consequences thereof

12. Term and Termination: Duration of the agreement and circumstances allowing early termination

13. Confidentiality: Obligations regarding confidential information

14. General Provisions: Standard boilerplate clauses including notices, amendments, governing law, etc.