Accounts Receivable Assignment
An accounts receivable assignment can be an agreement between a lending company and a borrowing company. The lender gets the right to collect the borrower's accounts receivable should they default on their loan. Also, an accounts receivable assignment can be an agreement for a third-party collection agency, like AAB, to collect your accounts receivable.
It should be noted that a receivable is not sold or ownership transferred under an accounts receivable assignment. An assignment formally grants a collection agency the right to collect a receivable on your behalf. The other main factor is the terms and commissions contained in an accounts receivable assignment.
Accounts Receivable Assignment Terms
The assignment may limit an agency's authorization to sue accounts on your behalf. Usually, the agency's ability to sue is contingent on the facts justifying litigation and written approval from the client before the commencement of a suit.
Another assignment term is the commission rate a collection agent will charge for collecting your accounts receivable. Suppose a client has a mix of consumer and commercial accounts. In that case, different rates could apply to different types of accounts.
A proper accounts receivable assignment should define when the collection agency remits the net funds collected on your accounts. Special handling instructions for your accounts can also be included in an assignment. Reporting delinquent accounts to the credit bureaus is another example of terms that should be considered when negotiating an accounts receivable assignment.
AAB Accounts Receivable Assignment/Agreement
At AAB, we consider the assignment process to be fundamental. A proper accounts receivable assignment or agreement clearly defines the rights and obligations of both parties. Everything is upfront, and both sides understand the terms. Each client differs in some respect, so this is the reason we don't rely on a standard format for an accounts receivable assignment.
At AAB, we aim to provide an accounts receivable assignment that is fair to both sides. Different types of accounts receivable require different combinations of debt collection services. When dealing with AAB you will be dealing with an AAB professional who has over 20 years of experience in the trenches, collecting accounts.
Get the ball rolling with a quick call to an AAB professional or request a free quote for a fair, cost-effective accounts receivable assignment