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The Debt Factoring Agreement is essential for businesses seeking to improve their working capital position by monetizing their accounts receivable. This document, governed by Hong Kong law, establishes a framework where a financial institution (factor) purchases trade receivables from a business at a discount, providing immediate liquidity. The agreement is particularly useful for companies with significant B2B sales and lengthy payment terms. It covers crucial aspects such as receivables eligibility, purchase price mechanisms, representations and warranties, operational procedures, and risk allocation. The document ensures compliance with Hong Kong's legal requirements, including proper assignment procedures under the Law of Property Ordinance and registration requirements under the Companies Ordinance. It's designed to protect both the factor's interests in acquiring quality receivables and the client's need for reliable working capital financing.

1. Parties: Identification of the Factor (purchaser) and the Client (seller of receivables)

2. Background: Context of the agreement, business relationship, and purpose of the factoring arrangement

3. Definitions and Interpretation: Key terms used throughout the agreement, including Eligible Receivables, Purchase Price, Reserve, etc.

4. Sale and Purchase of Receivables: Core provisions regarding the assignment and transfer of receivables

5. Purchase Price and Payment Terms: Calculation of purchase price, discount rate, reserve amounts and payment mechanics

6. Eligibility Criteria: Criteria for receivables to qualify for purchase under the agreement

7. Representations and Warranties: Client's representations regarding business, receivables, and authority to enter agreement

8. Covenants: Ongoing obligations of the Client regarding operation of business and handling of receivables

9. Collection and Servicing: Procedures for collection of receivables and related services

10. Fees and Charges: All fees payable including factoring fees, processing fees and other charges

11. Events of Default: Circumstances constituting default and consequences

12. Termination: Terms for termination of the agreement and post-termination procedures

13. Indemnification: Client's obligations to indemnify Factor for losses or claims

14. Confidentiality: Protection of confidential information exchanged under the agreement

15. Notices: Process for giving formal notices under the agreement

16. Governing Law and Jurisdiction: Specification of Hong Kong law and jurisdiction