Accounts Receivable Assignment Agreement Template for the United States

An Accounts Receivable Assignment Agreement is a legal contract that transfers your rights to collect outstanding invoices from customers to another party, typically a lender or factoring company. Under United States law, this document must comply with the Uniform Commercial Code Article 9, which governs secured transactions and receivables assignments across all states. You'll use this agreement when seeking immediate cash flow from unpaid invoices or when securing financing against your receivables portfolio.

When do you need this document?

You need this agreement when your business requires immediate working capital and has substantial accounts receivable. Factoring companies use these agreements to purchase your invoices at a discount, providing instant cash flow while assuming collection responsibilities. Asset-based lenders require these assignments as collateral for credit facilities, securing their loans against your receivable portfolio. Manufacturing companies often assign receivables to accelerate cash conversion cycles, while service businesses use them to bridge payment gaps from long-term contracts. You'll also need this document for receivables securitization, where multiple receivables are pooled and sold to investment vehicles.

Key legal considerations

The assignment must clearly identify all receivables being transferred, including specific invoice numbers, amounts, and debtor information. Your representations and warranties regarding receivable quality, collectibility, and absence of disputes are crucial, as you remain liable if these prove false. The agreement should specify whether the assignment is with or without recourse, determining your liability for uncollectible accounts. Notification provisions are critical under UCC Article 9, as proper notice to account debtors protects the assignee's collection rights. You must address potential conflicts with existing security interests, subordination agreements, and negative pledge clauses in other financing arrangements. The purchase price calculation, payment terms, and any ongoing collection responsibilities require precise definition to avoid disputes.

Legal requirements in United States

Under UCC Article 9, assignments of accounts receivable may require filing UCC-1 financing statements to perfect the assignee's security interest and establish priority over other creditors. The Federal Assignment of Claims Act governs assignments involving government receivables, requiring specific compliance procedures and obtaining federal agency consent. When consumer receivables are involved, the Fair Debt Collection Practices Act and Consumer Credit Protection Act impose additional notification and collection practice requirements. State laws may impose additional disclosure requirements, particularly in factoring arrangements, and some states require specific licensing for commercial finance companies. The agreement must comply with applicable usury laws when financing charges or fees are involved, and anti-assignment clauses in underlying customer contracts may restrict your ability to assign certain receivables.