One facet of the factoring relationship is the Purchase & Sale Agreement. It is the contract between the factoring company and its clients. The contract is only a part of the whole relationship. A lot of what a factoring company does for their clients is not included in the actual agreement. The reason is, the agreement is primarily a mechanism for the factoring company to protect itself from fraud and non-payment. The conditions in the agreement might not go into detail about where to fax something or what day the reserve goes out. But it will provide onerous language to go after uncollected funds in any way possible including collecting from non-factored customers and making borrowing from other sources impossible in the event of a serious default.
It is helpful to seek an attorney who has experience with commercial loan documents in order for them to offer the best review of the Agreement. General business lawyers or specialists might not be aware of the standard operating language that comprises these agreements. What may seem completely out of bounds to a reader unaccustomed to the factoring industry, is completely normal to attorneys representing banks and lending institutions. So it doesn’t hurt to ask whether the attorney reviewing the contract has a background in assessing non-standard commercial loan agreements used by factoring companies.