Construction Contractor Finance Alternatives: Assignment of Accounts Receivables vs. Factoring Agreements

A live 90-minute CLE video webinar with interactive Q&A


Wednesday, January 5, 2022

1:00pm-2:30pm EST, 10:00am-11:30am PST

Early Registration Discount Deadline, Friday, December 3, 2021

or call 1-800-926-7926

This CLE webinar will advise construction attorneys on the risks and advantages of utilizing alternative forms of financing, explicitly focusing on the assignment of accounts receivables or factoring. The panel will address the risks and benefits when pursuing these different finance options and best practices when proceeding with alternative finance.

Description

Construction industry stakeholders typically have to consider cash flow issues related to performance and payment. The lag between production and pay can lead those stakeholders to seek alternative forms of finance by assigning their accounts receivables as collateral for a secured loan, or they factor them. What impacts can this have on a construction project when a contractor or vendor assigns or factors its accounts receivable?

Both forms of finance provide upfront payments to the contractor, but several differences can affect the relationship with customers and a contractor's rights and obligations. Whether an assignment of receivables or a factor is used can alter lien rights. Most states require the client (or the factor as assignee) to notify the owner, general contractor, or bond company explaining that the client is providing services and materials on the project and must be paid. Some states require "notice of intent to lien" or "preliminary notices" instead, and if any required notice is late, even by one day, lien/bond rights are lost.

Contractors and counsel should consider due diligence that a factor or assignee may demand before funding. The financier will generally monitor construction projects and know the client's sub-subcontractors and suppliers to assure these parties are paid, and provide construction releases. If not, these sub-subcontractors and suppliers have the right to seek payment directly against the account debtor, offsetting the money owed to the factor. In essence, the factor must be confident the client has the skills to perform the construction work.

Listen as our expert panel discusses both assignments and factors, the risks and advantages of pursuing each option, and what due diligence a financier may consider before funding either payment method.

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Outline

  1. Assignment of accounts receivables
    1. Risks
    2. Advantages
  2. Factoring
    1. Risks
    2. Advantages

Benefits

The panel will address these and other relevant topics:

  • When should a general contractor consider an assignment of accounts receivables?
  • What should a general contractor know regarding factoring their accounts?
  • How are lien rights affected by the assignment of accounts receivables and factoring?
  • What are the risks of assignment of accounts receivables and factoring in construction? What are the advantages?

Faculty

Loren, Bruce
Bruce Loren

Partner
Loren & Kean Law

For nearly 30 years, Mr. Loren has focused his practice on construction law and factoring law. Mr. Loren has achieved...  |  Read More

Additional faculty
to be announced.
Attend on January 5

Early Discount (through 12/03/21)

Cannot Attend January 5?

Early Discount (through 12/03/21)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

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