Accounts Receivable Policy

ACCOUNTS RECEIVABLE POLICY

1. Document Preamble & Recitals

THIS ACCOUNTS RECEIVABLE POLICY (the "Policy") is entered into and made effective as of [Effective Date] (the "Effective Date"), by and between [Company Name], a [State of Incorporation/Organization] [Corporation/LLC] with its principal place of business located at [Company Address] (hereinafter referred to as the "Company"), and [Counterparty/Client Name], a [State/Jurisdiction of Organization] [Corporation/LLC/Individual] with its principal place of business located at [Counterparty Address] (hereinafter referred to as the "Customer").

Recitals

WHEREAS, the Company provides certain goods, products, and/or services to its commercial and consumer clients;
WHEREAS, the Customer desires to purchase goods and/or services from the Company on credit, and the Company is willing to extend such credit to the Customer subject strictly to the terms, conditions, covenants, and procedures set forth in this Policy; and
WHEREAS, the Parties intend for this Policy to constitute a binding legal agreement governing all commercial credit extensions, billing procedures, payment obligations, collections, and associated legal remedies between them within the jurisdiction of [Jurisdiction].

NOW, THEREFORE, in consideration of the mutual covenants, promises, and legal obligations contained herein, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby mutually acknowledged, the Parties agree as follows:

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2. Operational Definitions

For the purposes of this Policy, the following terms shall have the precise legal meanings set forth below:

1. "Accounts Receivable" or "AR" means the legally enforceable claims for payment held by the Company against the Customer for goods, products, or services supplied pursuant to any underlying commercial contract, Statement of Work, or Purchase Order.
2. "Business Day" means any day other than a Saturday, Sunday, or any other day on which commercial banks are authorized or required by law to close in the state of [Jurisdiction].
3. "Credit Limit" means the maximum aggregate monetary amount of unsecured credit extended by the Company to the Customer at any single point in time, as formally established and periodically reviewed by the Company's credit department.
4. "Default" means any failure by the Customer to observe, perform, or comply with any material covenant, obligation, term, or condition contained within this Policy or any underlying commercial contract, including the failure to remit timely payment.
5. "Disputed Amount" means a specific, clearly identified portion of an Invoice that the Customer contests in good faith pursuant to the formal dispute notification mechanisms detailed herein.
6. "Effective Date" has the meaning ascribed to it in the preamble of this Policy.
7. "Due Date" means the exact calendar date by which payment for an issued Invoice must be received by the Company, calculated strictly as [Number] calendar days from the date of the Invoice issuance, unless otherwise specified in writing.
8. "Invoice" means an itemized written demand for payment generated and transmitted by the Company to the Customer detailing goods or services rendered, unit prices, applicable taxes, freight charges, and total balance due.
9. "Late Fee" means the statutory or contractual financial penalty assessed against overdue balances, calculated at the rate of [Interest Rate, e.g., 1.5%] per month, or the maximum rate permitted by applicable law, whichever is less.
10. "Party" means either the Company or the Customer individually, and "Parties" means both the Company and the Customer collectively.

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3. Substantive Terms & Obligations

3.1 Credit Application and Evaluation

1. Prior to the issuance of any commercial credit, the Customer shall submit a fully executed and truthful Credit Application, along with such financial statements, trade references, and banking particulars as the Company may reasonably require.
2. The Company reserves the absolute, unilateral right to approve, deny, modify, suspend, or revoke the Customer’s Credit Limit at any time based on ongoing credit evaluations, market conditions, or changes in the Customer's financial solvency.

3.2 Invoicing and Delivery

1. The Company shall issue Invoices to the Customer upon the fulfillment of orders, delivery of goods, or completion of services (or milestone phases thereof), transmitted via electronic mail to [Customer Billing Email Address] or via physical mail to the Customer's principal address.
2. The Customer expressly acknowledges that failure to receive an Invoice via a specific channel does not relieve, defer, or excuse the Customer’s absolute legal obligation to remit payment on or before the established Due Date.

3.3 Payment Terms and Methods

1. All payments due under this Policy must be remitted in United States Dollars (USD) via Automated Clearing House (ACH) transfer, wire transfer, corporate check, or approved electronic payment gateway, in accordance with the remittance instructions set forth on the face of the applicable Invoice.
2. Time is of the essence with respect to all payment obligations. Payment shall be deemed legally received only when cleared funds are fully credited to the Company’s designated bank account.
3. If the Customer applies payments with remittance advice that does not specify the targeted Invoices, the Company reserves the legal right to apply such funds against the oldest outstanding Invoices, service charges, or legal fees at its sole discretion.

3.4 Performance Metrics and Reporting

1. The Customer shall maintain a current accounts payable status and shall provide updated financial statements to the Company within [Number] calendar days of a written request.
2. The Company shall maintain accurate ledger accounts reflecting all debits, credits, and outstanding balances, which shall be made available to the Customer upon reasonable written request for account reconciliation purposes.

3.5 Representations and Warranties

1. Each Party represents and warrants that it possesses full corporate power, authority, and legal right to enter into, execute, and perform its obligations under this Policy.
2. The Customer represents and warrants that it is solvent, is paying its debts as they become due, and has not filed for bankruptcy protection within the preceding seven (7) years.

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4. Default, Termination, and Remedies

4.1 Classification of Default

The occurrence of any one or more of the following events shall constitute an immediate, material "Default" under this Policy:

1. The failure of the Customer to pay any Invoice or financial obligation in full on or before the applicable Due Date.
2. The breach of any material representation, warranty, covenant, or obligation contained within this Policy or any commercial agreement between the Parties.
3. The insolvency of the Customer, the filing of a voluntary or involuntary petition under the United States Bankruptcy Code or any similar state insolvency law by or against the Customer, the appointment of a receiver or trustee for all or a substantial portion of the Customer's assets, or the execution of an assignment for the benefit of creditors.
4. Any adverse, material change in the financial condition or business operations of the Customer that, in the reasonable commercial judgment of the Company, impairs the Company's security or prospect of payment.

4.2 Notice and Cure Periods

1. Upon the occurrence of a payment Default, the Company shall provide written notice of default to the Customer.
2. The Customer shall have exactly thirty (30) business days from the date of transmission of such notice to fully cure the payment Default by remitting all overdue funds, accrued Late Fees, and associated collection expenses.
3. For non-monetary Defaults, the Customer shall have thirty (30) business days from the receipt of written notice to cure such Default to the reasonable satisfaction of the Company.
4. Failure to cure any Default within the specified 30-business-day period shall result in immediate termination of credit privileges without further notice.

4.3 Legal Recourse and Remedies

Upon the expiration of the applicable cure period following a Default, the Company may, at its sole discretion and without waiving any other rights available at law or in equity, exercise any or all of the following remedies:

1. Immediate Acceleration: Declare all outstanding Invoices, balances, and future payment obligations immediately due and payable in full.
2. Suspension of Performance: Immediately suspend the delivery of all ongoing goods, services, and commercial performance under this Policy or any other agreement between the Parties.
3. Assessment of Late Fees & Interest: Assess compounding Late Fees on all overdue balances at the rate of [Interest Rate, e.g., 1.5%] per month (18% per annum) from the original Due Date until paid in full.
4. Collection and Legal Costs: Recover from the Customer all costs, expenses, and reasonable attorneys' fees incurred by the Company in connection with the collection of overdue accounts, whether through formal litigation, arbitration, or third-party collection agencies.
5. Set-off Rights: Exercise a legal right of set-off against any funds, deposits, or credits held by the Company belonging or owed to the Customer.

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5. Boilerplate Legal Provisions

5.1 Severability

If any provision, clause, or section of this Policy is held to be invalid, illegal, or unenforceable by a court or tribunal of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable. If modification is not possible, the offending provision shall be severed, and the remaining provisions of this Policy shall remain in full force and effect, continuing to bind the Parties.

5.2 Entire Agreement

This Policy, inclusive of any expressly incorporated Credit Applications, Invoices, and exhibits, constitutes the entire, final, and exclusive agreement between the Parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous negotiations, understandings, proposals, oral communications, or agreements, whether written or oral. No amendment, modification, or waiver of any provision of this Policy shall be effective unless executed in a formal written instrument signed by an authorized representative of each Party.

5.3 Force Majeure

Neither Party shall be held liable or deemed in Default for any failure or delay in fulfilling or performing obligations under this Policy when such failure or delay arises out of causes beyond the reasonable control and without the fault or negligence of the Party claiming relief, including acts of God, natural disasters, epidemics, pandemics, war, terrorism, civil unrest, labor strikes, utility failures, or governmental restrictions (each a "Force Majeure Event"). The Party affected by a Force Majeure Event shall promptly notify the other Party in writing. Notwithstanding the foregoing, a Force Majeure Event shall not excuse or delay the Customer's absolute obligation to remit payment for goods and services already delivered and accepted.

5.4 Governing Law

This Policy, and all claims, disputes, or causes of action arising out of or relating to it—whether sounding in contract, tort, or statute—shall be governed by, construed, and enforced in accordance with the substantive laws of the State of [Jurisdiction], without regard to its conflict of laws principles. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Policy.

5.5 Dispute Resolution

1. Negotiation: In the event of any dispute, controversy, or claim arising out of or relating to this Policy, including its formation, performance, breach, or termination, the designated executive representatives of the Parties shall first attempt in good faith to resolve the matter through direct business negotiation within [Number] business days of written notice of the dispute by either Party.
2. Arbitration / Litigation: If the dispute is not resolved through executive negotiation, any unresolved controversy shall be submitted to binding arbitration administered by the [American Arbitration Association / Designated Arbitration Body] in accordance with its Commercial Arbitration Rules. The place of arbitration shall be [City, State], and the proceedings shall be conducted in the English language before a single neutral arbitrator. The award rendered by the arbitrator shall be final and binding, and judgment upon the award may be entered in any court having competent jurisdiction. [Alternatively: ...submitted exclusively to the state or federal courts located within [County, Jurisdiction], and each Party hereby irrevocably submits to the personal jurisdiction of such courts.]*

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6. Formal Execution Block

IN WITNESS WHEREOF, the Parties hereto have caused this Accounts Receivable Policy to be duly executed by their respective authorized officers, agents, or representatives, effective as of the Effective Date first written above. Each signatory warrants that they possess full legal capacity and corporate authority to bind their respective entity to the terms of this Policy.

FOR: [Company Name] (The Company)

Signature: __________________________________________________

Printed Name: [Authorized Signatory Name]

Title: [Title, e.g., Chief Financial Officer / Managing Director]

Date: [Date of Execution]

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FOR: [Counterparty/Client Name] (The Customer)

Signature: __________________________________________________

Printed Name: [Authorized Signatory Name]

Title: [Title, e.g., Chief Executive Officer / Director of Finance]

Date: [Date of Execution]