Lawyer - Factoring

In an economic climate where payment times are getting longer and receivables management is becoming strategic, factoring is emerging as a flexible financing solution. But behind its apparent flexibility lies a complex contractual arrangement, combining the transfer of receivables, outsourced management and a payment guarantee. For companies, simply signing an agreement is not enough: they need to master its legal subtleties.

Our firm is involved at every stage of the factoring process: auditing and securing the agreement, providing support in the event of difficulties with the factor, defending against unjustified recourse, and managing the impact of insolvency proceedings. With a proven track record in banking law, insolvency proceedings and enforcement procedures, we can help you turn this cash-flow lever into a secure tool.

Renowned for our rigorous approach to financial agreements and our ability to handle complex contractual arrangements, we make legal certainty a performance driver for our customers. Because operational simplicity must never overshadow the legal challenges.

Securing the implementation of a factoring agreement

The factoring contract is an innominate, intuitu personae contract, structured around a framework agreement and its annexes. It involves the transfer of trade receivables to a credit institution, which collects them and guarantees payment, sometimes in advance. This mechanism is partly based on conventional subrogation.

But this agreement should never be signed lightly. Essential clauses need to be negotiated carefully: the extent of the transfer obligation, invoice approval procedures, guarantees such as the retention clause, subordination clause or request for a personal undertaking from the manager.

Our firm is involved from the negotiation stage onwards to protect your interests: study of the project, explanation of the legal conditions, drafting or proofreading of the contract, and strategic legal advice.

Managing the risks of an ongoing factoring agreement

Even a well-drafted agreement can pose problems in practice. The factor often has the right to approve receivables, which can be withdrawn or made subject to conditions. It can impose ceilings per assigned debtor, vary its guarantees according to risk, or suspend payments on the due date.

Some forms of factoring, such as confidential factoring or reverse factoring, raise issues of enforceability against debtors or proof of transfer. Their operation requires greater vigilance with regard to operational clauses.

We analyse the overall operation of your factoring, identify the risks and provide you with practical solutions. Whether it's a simple dispute or an emerging litigation, our intervention aims to protect your rights without delaying the payment of your invoices.

Challenging factoring recourse or securing payments

The factor may return to the member despite the assignment, particularly in the event of a dispute over the service or an exception raised by the debtor. These remedies are often supported by exclusion clauses or legal effects linked to the non-performance of the initial contract.

Some debt collection companies commissioned by factoring companies systematically issue formal notices or summonses, including against self-employed professionals.

We intervene before the commercial court or, where appropriate, the civil courts, to assert your rights. This includes contesting the enforceability of certain clauses, demonstrating that an invoice is unjustified, or defending the guarantor.

Factoring and companies in difficulty: crucial issues

When a company enters insolvency proceedings, the factoring agreement is affected in a number of ways. The factor may attempt to offset receivables through a current account in credit, or block advance financing on the grounds that the procedure has been initiated.

They may also seek to hold the transferor or the architect of the contract liable for unfair termination. A number of decisions by the Commercial Chamber of the French Supreme Court (Cour de cassation) set out the conditions for the validity of these practices.

Better understand the legal effects of a factoring contract

Factoring is based on sophisticated legal mechanisms: assignment or subrogation, enforceability against the debtor, transfer of receivables, management of receivables. Each operation is subject to specific definitions and procedures, the effects of which can be unexpected if the framework is not mastered.

Some professions (in particular regulated liberal professions or associations involved in health or public interest activities) are not always eligible for all forms of factoring. Each case must therefore be examined carefully.

Our firm carries out an initial analysis of the company's status, its accounts receivable and its invoicing arrangements, in order to assess the suitability and risks of such a financing solution.

Why call on our firm for your factoring needs?

Our contractual and banking law practice is based on a tried-and-tested methodology: understanding your needs, studying the existing contractual framework, assessing the risks, drafting tailor-made solutions, then defending you in court if necessary.

We can help any professional faced with a problem relating to a factoring contract: a commercial company, a liberal profession, an association, the supplier of an assigned debtor or a chartered accountant wishing to advise a client.