Assignment of Accounts Receivable with Non-Recourse

Accounts receivable are the payments and amounts that a company will get from its clients and customers. For example, a company supplies orders to its customers on credit and as they agree to pay for the orders after some time, these customers are actually the accounts receivable.

What is mean by Non-Recourse Accounts Receivable?

These are the accounts receivable that once transferred to a third party, can’t be transferred back or returned to the actual creditor no matter what the situations or circumstances are. It is also not possible to transfer back these accounts to the actual creditor even if the creditor wants to acquire them and demands for them.

Introduction to the Assignment of Accounts Receivable with Non-Recourse:

When a company feels that it might go under if there are not enough finances to invest in the business, there is a simple way of getting money from another company without selling long term assets or getting loan from the bank; assigning accounts receivable to the company and getting paid in exchange. This process is done by signing the assignment of accounts receivable with non-recourse agreement. By signing this agreement the actual creditor and the assignee agree that the assignee has paid a lump sum amount to the creditor and as the creditor has transferred the rights of his accounts receivable to the assignee, the assignee will now receive the payments against the accounts receivable.

Brief description of Assignment of Accounts Receivable with Non-Recourse:

It may sound like something that companies can’t or won’t do but this is something that many organizations do in order to save their businesses and keep their companies from going bankrupt. For example, a company owner realizes that he has to arrange for quick cash in order to pay to the supplier or he will be out of business within short period of time. He doesn’t want to get loan and he can’t sell his assets in such short period of time so there is only one other option; assigning his accounts receivable to a third party and getting money from them. This is done by signing the assignment of accounts receivable with non-recourse agreement.

Key elements to include in the Assignment of Accounts Receivable with Non-Recourse:

  • Name of the actual creditor with complete address
  • Name of the new creditor or assignee who will receive the payments with complete address
  • Date when the assignment agreement is being signed
  • Reasons for assigning the accounts receivable to new creditor explained by the previous creditor (if applicable)
  • Details of the accounts receivable that are being assigned to the assignee i.e. dates for each account, amount of each account and purpose of each account etc.
  • Date from which the new creditor will have the ownership on the accounts receivable
  • Indication towards the type of the accounts receivable i.e. non-recourse
  • Claim from both parties that they understand it’s a non-recourse accounts receivable assignment
  • Compensation given by the assignee to the actual creditor in exchange for the accounts receivable
  • Signature of both parties i.e. previous creditor and assignee with witnesses

Here is preview of a Free Form for Assignment of Accounts Receivable with Non-Recourse,

Assignment of Accounts Receivable with Non-Recourse

Here is download link for this Assignment Form of Accounts Receivable with Non-Recourse,

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