Accounts Receivable, Specific Assignment

For valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned hereby assigns and transfers to __________________________ (“Assignee”) the accounts receivable listed in Exhibit A (collectively, the “Assigned Accounts”). This assignment is made as general and continuing collateral security for all present and future indebtedness and liabilities of the undersigned to the Assignee, including any outstanding balance, and constitutes a first and prior claim on the Assigned Accounts. The undersigned further agrees to the following terms:

1. Rights of the Assignee

The Assignee may collect, sell, or otherwise deal with the Assigned Accounts or any portion thereof at its discretion, on such terms and conditions, and at such times as it deems advisable, without notice to the undersigned (except where required by applicable law). The Assignee may also incur reasonable expenses and pay for services (including legal services) related to the collection, realization, sale, or enforcement of the Assigned Accounts, and such expenses shall be added to the undersigned’s indebtedness.

2. No Liability of Assignee

The Assignee shall not be liable for any failure to collect, realize, sell, or otherwise enforce any part of the Assigned Accounts. The Assignee is not obligated to initiate proceedings to enforce the Assigned Accounts or to preserve any rights of the Assignee, the undersigned, or any third party.

3. Discretion in Dealing

The Assignee may, at its discretion, extend time, grant indulgences, take or release security, accept compositions, and otherwise deal with the undersigned and third parties without affecting the undersigned’s liability or the Assignee’s rights in respect of this assignment.

4. Trustee Status of the Undersigned

Any funds received by the undersigned in respect of the Assigned Accounts shall be held in trust for the Assignee and immediately remitted to the Assignee.

5. Application of Funds

All funds received by the Assignee in connection with the Assigned Accounts (whether under Section 4 or otherwise) may be applied towards the undersigned’s indebtedness as the Assignee sees fit. Alternatively, the Assignee may release such funds to the undersigned without prejudice to its rights or claims.

6. Information and Access

Upon request, the undersigned shall provide the Assignee with written information related to the Assigned Accounts. The Assignee shall have the right to inspect, or temporarily take custody of, securities, bills, notes, books, records, and related documents. The Assignee shall be granted access to any premises occupied by the undersigned for these purposes.

7. Further Assurances

The undersigned agrees to execute all additional documents, financing statements, and instruments required by the Assignee to perfect or effectuate this assignment. This includes obtaining waivers or subordinations from parties with prior claims. The undersigned appoints the Assignee as its lawful attorney-in-fact, irrevocably and with full substitution rights, to execute any such documents on the undersigned’s behalf using the undersigned’s name where deemed necessary.

8. Binding Effect

The provisions of this Agreement shall benefit the Assignee and its successors and assigns and shall bind the undersigned and their heirs, executors, administrators, successors, and assigns.

9. Notices

Any notices required or made pursuant to this Agreement shall be in writing and delivered in person or via a recognized overnight courier service such as FedEx.

If to the Assignee: _______________________________________________________.
If to the Assignor: _______________________________________________________.

10. No Waiver

A waiver or failure by either party to enforce any provision of this Agreement shall not constitute a waiver of any other right or provision under this Agreement.

11. Entire Agreement

This Agreement represents the entire understanding between the parties and supersedes all prior discussions, agreements, or representations, whether oral or written. Any amendments must be made in writing and signed by both parties.

12. Governing Law

This Agreement shall be governed by and interpreted in accordance with the laws of the State of ____________________. Any disputes arising under this Agreement must be brought exclusively in that jurisdiction.

13. Headings

Headings used in this Agreement are for convenience only and shall not affect the meaning or interpretation of any provision.

14. Severability

If any provision of this Agreement is found by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions shall remain in full force and effect as though the invalid portion had never been included.

In witness whereof, the parties have executed this Agreement as of the date first written above.

________________________________________________
Assignee

________________________________________________
Assignor

___________________
Date

How to Use This Sample Format

Accounts Receivable, Specific Assignment

This guidance is provided to assist in preparing the Accounts Receivable Specific Assignment Agreement. Typically, this type of document is used in private transactions, as institutional lenders usually require standardized documents. These standards ensure consistency in legal rights and obligations across transactions, aiding bankers, collectors, and legal professionals.

Despite this, the format here can be effectively used to secure private financing with greater assurance than a traditional equity investment. This is particularly relevant in uncertain market conditions, such as a stagnant stock market.

Ensure both parties execute the agreement in at least two copies. One should be retained in the corporate minute book (Board approval is typically required for this type of transaction), and another in the banking or lending file. A third copy should also be kept in your office or home corporate records.

This form of financing is demanding and often expensive to maintain. It should not be entered into lightly. While it can be beneficial when accounts receivable are reliable and timely, it may become problematic if chargebacks and disputes are common. This is especially true in industries like technology, where billing discrepancies are frequent. Lenders view chargebacks unfavorably, while pre-agreed discounts are generally acceptable.

Lenders expect a clean, verifiable A/R ledger, as it constitutes their collateral. Any irregularities in the ledger complicate the process and reduce lender confidence, adding time and complexity to administration.

Ultimately, this type of financing can provide necessary working capital but carries costs beyond simple interest—namely, in time, administration, and oversight. Like all financial agreements, it is easier to enter than to exit. Thoroughly consider whether this form of lending aligns with your business needs before proceeding.