Accounts Receivable, All Accounts

For valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned hereby assigns and transfers to __________________________ (“Assignee”) all accounts receivable (“Accounts Receivable”) as general and continuing collateral security for the payment of all current and future debts and obligations owed by the undersigned to the Assignee, including any remaining unpaid balances. This assignment shall constitute a first and prior claim on the Accounts Receivable. The undersigned further agrees as follows:

1. The Assignee may, at its discretion and without prior notice to the undersigned (except where required by law), collect, sell, or otherwise deal with the Accounts Receivable in any manner, on any terms, and at any time it deems appropriate. The Assignee may deduct and/or pay reasonable costs, including legal fees, incurred in the collection, realization, or enforcement of the Accounts Receivable, and may add such costs to the undersigned’s indebtedness.
2. The Assignee shall not be liable for any failure to collect, realize, sell, or enforce payment of the Accounts Receivable or any part thereof. The Assignee is not obligated to initiate legal or collection proceedings to enforce or preserve any rights related to the Accounts Receivable.
3. The Assignee may grant extensions, accept partial payments, release or discharge obligations, and otherwise deal with the undersigned, its debtors, guarantors, and any other relevant parties, as it sees fit, without affecting the liability of the undersigned or the Assignee’s rights under this agreement.
4. All funds received by the undersigned in respect of the Accounts Receivable shall be held in trust for the Assignee and shall be immediately remitted to the Assignee.
5. All funds received by the Assignee, whether under the above clause or otherwise, may be applied to any part of the undersigned’s debt as the Assignee sees fit or, at its discretion, returned to the undersigned—without prejudice to the Assignee’s rights and claims.
6. The undersigned shall, upon request, provide all information relating to the Accounts Receivable as requested by the Assignee. The Assignee shall have the right to inspect and temporarily take possession of related documents, securities, books, and records, and shall be granted access to all premises necessary to perform such inspection.
7. The undersigned shall, upon request, execute and deliver any financing statements, further assignments, or other documents, and perform any actions required by the Assignee to enforce this agreement or perfect its interest in the Accounts Receivable. The undersigned irrevocably appoints the Assignee as its lawful attorney-in-fact, with full authority and power of substitution, to take any such actions on its behalf using the undersigned’s name as necessary or appropriate.
8. This agreement shall benefit the Assignee’s successors and assigns and shall bind the undersigned’s heirs, executors, administrators, successors, and assigns.

9. Notices

   Any notice required or permitted under this Agreement shall be in writing and delivered either in person or by a recognized overnight courier such as FedEx to the following addresses:

   If to the Assignee: ____________________________________________________

   If to the Assignor: ____________________________________________________

10. No Waiver

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

11. Entire Agreement

    This document constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral. No amendment or modification of this Agreement shall be valid unless made in writing and signed by both parties.

12. Governing Law

    This Agreement shall be governed by and construed in accordance with the laws of the State of ____________________. Any legal action arising from this Agreement shall be brought exclusively in the appropriate courts of that jurisdiction.

13. Headings

    Headings are included for convenience only and shall not affect the interpretation or construction of this Agreement.

14. Severability

    If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be severed, and the remaining provisions shall remain in full force and effect.

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

This section is intended to assist you in effectively using this Accounts Receivable Agreement template. Please note that this document is typically suitable for private transactions, as most financial institutions require their own standardized forms to ensure uniformity and ease of processing for bankers, attorneys, and collection agents.

That said, this form can be a valuable tool for securing private financing, especially when compared to equity-based arrangements. It offers a structured approach for lenders, making it an appealing option when the stock market is volatile.

Ensure both parties sign the agreement in at least two copies. Keep one signed original in your corporate minute book (board approval is usually required) and another in your lending records. You may also wish to retain a third copy for safekeeping, either at home or in your office files.

This type of secured lending arrangement requires careful consideration. If your accounts are stable and payments are predictable, this can be a viable financing method. However, if your accounts receivable are subject to frequent disputes or chargebacks, as is common in the tech sector, this may introduce significant challenges. Lenders typically expect clean, reliable A/R ledgers as they serve as their primary collateral. Chargebacks, even when well-documented, are generally viewed unfavorably.

Be aware that managing this kind of financing arrangement can be both time-consuming and costly. It often demands consistent oversight and detailed documentation. While it may provide essential working capital, it carries additional administrative burdens and risks beyond just the cost of interest.

Finally, keep in mind that agreements like this are usually easier to enter than exit. Review all implications thoroughly before proceeding with this form of funding.