BALANCE RECEIVABLES PURCHASE TERMS
Last updated: March 1, 2022
These Balance Receivables Purchase Terms (“Terms”) set out terms and conditions relating to the sale and purchase of certain receivables. These Terms may be incorporated by reference into an agreement (“Agreement”) between a Balance entity (“Balance”) and the entity wishing to sell receivables (“Merchant”).
Capitalized terms not defined in these Terms have the meanings given in the Agreement, and to the extent that there is a conflict between the Agreement and these Terms, these Terms will prevail. Balance may amend these Terms from time to time, in its sole discretion and for any reason. Amendments will be indicated by a changed Last Updated date at the top of this web page, and Merchant is responsible for monitoring this web page for amendments. Merchant’s subsequent access and use of the Balance Platform or use of the Services constitutes Merchant’s consent and agreement to such amendments.
“Debtor Relief Laws” means (i) Title 11 of the United States Code (“the Bankruptcy Code”) and (ii) all other applicable liquidation, conservatorship, bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization, suspension of payments, adjustment of debt, marshaling of assets or similar debtor relief laws of the United States, any state or any foreign country, from time to time, in effect affecting the rights of creditors generally.
“Discount” means, with respect to a Receivable, the amount equal to the difference between the face amount of such Receivable and the sum Balance agrees to pay for such Receivable, in its discretion and based on its own calculations and determination, but subject to the restrictions (if any) to which Balance has agreed with respect to its ability to exercise this discretion.
“Invoice” means a bill evidencing a Receivable created by Merchant and provided to a Buyer.
Non-Factored Amount" means, with respect to a Qualified Receivable, the full value of the goods or services provided, reflected as the Qualified Receivable’s face value minus the Purchased Receivable Amount.
“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.
“Purchase Percentage” means the percentage of a Qualified Receivable that Balance agrees will be purchased from the Merchant, which may be 100 percent or a lower percentage.
“Purchase Price” means, with respect to a Receivable or part thereof, an amount equal to the full amount of such Receivable minus an amount equal to the applicable Discount, multiplied by the Purchase Percentage.
“Purchase Terms” means the terms of the purchase of a Qualified Receivable, including the Purchase Percentage and the Discount.
“Purchased Receivable” means a Qualified Receivable, or part thereof, that Balance has purchased from Merchant.
“Purchased Receivable Amount” means with respect to a Purchased Receivable the face value of the Qualified Receivable multiplied by the Purchase Percentage.
“Purchased Receivable Limit” means the maximum amount of a specific Buyer’s Receivables that Balance may decide to purchase from Merchant that may be outstanding at any one time, as set forth in Section 2.1(a).
“Qualified Receivable” means a Receivable which satisfies the criteria set forth in Section 3.
“Receivable” means an amount owed to Merchant by the relevant Buyer for services that have been fully rendered or products that have been delivered to Buyer by Merchant or a third party acting on behalf of Merchant.
- Merchant Receivables.
2.1 Sale and Purchase Process. The purchase and sale of Receivables will occur as follows:
(a) Balance will establish a Purchased Receivables Limit for a relevant Buyer (which may vary from one Buyer to another and for some Buyers may be zero). To allow Balance to compute this Purchased Receivables Limit, Merchant agrees to provide Balance with any Merchant or Buyer information that Balance may request in order to evaluate the extent to which Balance will agree to purchase receivables from a particular Buyer. While Balance’s normal practice is to not change the Purchased Receivables Limit for 90 days after it is determined, Balance reserves the right to lower it at any time and for any reason. Even if Merchant has not used all of its Purchased Receivables Limit for a certain Buyer, Balance may decline to purchase a specific Qualified Receivable due from such Buyer, for any reason.
(b) Upon Balance’s receipt of Merchant's offer for Balance to purchase a Receivable, Balance will decide whether it wants to purchase the Receivable.
(c) If Balance then accepts such offer it will approve Buyer’s request for extended terms, and Balance and Merchant thereby complete the sale, assignment and transfer of the relevant Receivable to Balance as absolute owner. Balance will credit funds equal to the Purchase Price (subject to any reductions pursuant to Section 2.1(g) and minus any amounts due to a third party or that Balance is entitled to withhold under the Agreement) to the applicable Balance Account within 2 business days of allowing Buyer’s request for extended terms (subject to any delays Balance may require pursuant to Section 2.1(f)). Each of Merchant and Balance shall, at all times, treat the purchase of Receivables by Balance as a purchase by Balance and a sale by Merchant for federal, state, and local income tax purposes.
(d) Merchant will transfer to Balance, upon request, the specific Invoice delivered to Buyer with respect to a Purchased Receivable.
(e) Following Balance’s purchase of a Purchased Receivable, Merchant will (i) not be entitled to collect or receive any amount in connection with such Purchased Receivable, (ii) hold the entirety of any payment on such Purchased Receivable which may come into Merchant’s possession or control (even if such payment is payable to Merchant) in trust for the benefit of Balance, and promptly deliver to Balance all such payments (and indorse any payment which is payable to Merchant), and (iii) not hinder, delay or interfere with any payment of such Purchased Receivable or any terms thereof. Merchant will immediately inform Balance of any inquiries, complaints, correspondence or other communications from any Buyer or third party regarding any aspect of a Purchased Receivable or Invoice. Balance reserves the right to instruct Merchant regarding how to respond to the inquiry or to assume control from Merchant for responding to it.
(f) Balance reserves the right to not transfer the Purchase Price of a Purchased Receivable to Merchant until the later of (i) when Merchant completes delivery of the underlying goods and services to Buyer or (ii) the expiration of the time period during which Buyer may reject or return the goods and services.
(g) Merchant agrees that Balance may increase the Discount (with retrospective effect) if Balance discovers that Buyer paid for goods on terms different from those Merchant had disclosed to Balance.
(h) Funds received from a Buyer with respect to a Receivable will first be paid to Balance until Buyer has paid the full sum of the Purchased Receivable Amount. Only once Balance receives the full Purchased Receivable Amount will any funds received from Buyer with respect to that Receivable be payable to Merchant for the Non-Factored Amount of the Qualified Receivable.
(i) Balance may purchase a Receivable either on its own or in concert with a third party chosen by Balance.
2.2 Automation. Balance may automate certain or all aspects of the purchase, transfer, and sale of Receivables through pre-defined programmatic-based rules as can be found in the Balance Documentation and which Balance may change from time to time in its discretion and without notice.
2.3 Right of First Refusal. Balance has a right of first refusal with respect to any Receivable such that Merchant will not sell, or offer for sale, any Receivable to any Person without first providing Balance with a 2 day period during which Balance may elect to purchase the Receivable. Balance may execute its right to purchase a Receivable via the procedure described in Section 2.1.
2.4 Discretion. Notwithstanding anything to the contrary, Balance, in its sole and absolute discretion, will determine whether or not to purchase a Receivable, and Balance will under no circumstances be liable to Merchant for Balance’s failure or refusal to purchase a Receivable or any portion thereof.
- Merchant’s Representations and Warranties. Merchant warrants, represents, covenants and agrees that, with respect to each Receivable Merchant agrees to sell to Balance:
(a) the goods and services underlying the Purchased Receivable have been fully delivered or rendered to the relevant Buyer unless Balance has expressly waived this requirement in writing;
(b) such Receivable has not been outstanding for more than sixty (60) days from the date on which the Invoice was first issued for the Receivable, is valid and owing pursuant to all contracts, terms, and agreements to which Merchant is a party, including Merchant’s agreement with the relevant Buyer, which may not be modified or amended without Balance’s prior written consent;
(c) the terms and conditions of such Receivable have not been waived, altered, modified or amended in any respect following the Receivable’s origination;
(d) (i) the Receivable is not contingent in any respect for any reason and constitutes a legal, valid, binding and unconditional payment obligation of the applicable Buyer, is fully enforceable against such Buyer for the amount of the Receivable, and is not subject to any defense, counterclaim, recoupment, discount, adjustment or right of setoff or rescission, except to the extent that enforceability may be limited by Debtor Relief Laws and general principles of equity, (ii) there are no conditions precedent to the enforceability or validity of the Receivable that have not been satisfied or waived, (iii) Buyer owing such Receivable has no bona fide claim against Merchant; (iv) the Receivable is not and will not be subject to dispute between the relevant Buyer and Merchant, including with respect to the cost or quality of services rendered or products sold, (v) there are no Proceedings existing, pending or, to the knowledge of Merchant, threatened against or affecting Merchant, which materially and adversely affects or could affect the validity or enforceability of such Receivable; and (vi) the specific Invoice delivered to Buyer, evidencing such Receivable, bears the details provided by Balance as to how Buyer is to pay Balance;
(e) the transfer of such Receivable from Merchant to Balance complies with Applicable Law, Balance is not a lender and the purchase of Receivables is not a loan, and such Receivable has not been originated in, and, as of any date of determination, is not subject to the laws of, any jurisdiction under which the sale, transfer, assignment, setting over, conveyance or pledge of such Receivable would be unlawful, void or voidable;
(f) immediately prior to the sale of the Receivable to Balance, Merchant is the sole owner of such Receivable and has good and marketable title to the Receivable, and has the right to assign, sell and transfer such Receivable to Balance free and clear of any lien, pledge, charge, claim, security interest or other encumbrance, and Merchant has not sold, assigned or otherwise transferred or conveyed any right or interest in or to such Receivable, has not pledged such Receivable as collateral for any debt or other purpose, nor has Merchant authorized the filing of, or aware of the filing of, any financing statements against Merchant that include a description of collateral covering any portion of such Receivable;
(g) upon purchase by Balance: (i) except as provided in Section 2.1(i), each Purchased Receivable becomes the sole property of Balance, (ii) Merchant’s sale and assignment of such Purchased Receivables shall pass legal and equitable title in the Receivable to Balance free and clear of liens, claims and encumbrances, and (iii) Balance will have the right to assign, sell, transfer and pledge such Receivable to any person without limitation;
(h) Merchant has not induced, solicited or knowingly received or contracted to receive any advance of funds from a party other than the applicable Buyer with respect to such Receivable, directly or indirectly, for the payment of any amount required for the related Receivable;
(i) no consents or approvals are required by the terms of such Receivable or otherwise for the consummation of the sale, transfer or assignment of such Receivable or the rights and duties of the holder of the Receivable, and such Receivable is not subject to any restriction on the ability of the holder of the Receivable to exercise its rights;0
(j) such Receivable is not and will not become subject to a defense or claim in recoupment or setoff asserted against Balance;
(k) payments on such Receivable are payable to Merchant;
(l) such Receivable and the relevant Buyer are not subject to or restricted by any receivership, insolvency or bankruptcy proceeding;
(m) Merchant has not received any notice of (i) actual or imminent bankruptcy insolvency or material impairment of the financial condition of the relevant Buyer or (ii) actual or threatened litigation regarding the validity or enforceability of such Receivable;
(n) to the knowledge of Merchant, Merchant, on the one hand, and the applicable Buyer, on the other hand, are not engaged in any litigation, mediation, or arbitration whatsoever with respect to each other, and neither has threatened the other in writing with any litigation, mediation, or arbitration;
(o) the Receivable constitutes an “account”, a “payment intangible” or proceeds thereof and is not an “instrument”, “chattel paper” or “electronic chattel paper” (each such term as defined in the Uniform Commercial Code as in effect, from time to time, in each applicable jurisdiction); and
(p) such Receivable is evidenced by an Invoice that (i) is complete and accurate in all respects, and (ii) has been issued to and received by Buyer; and
The warranties and representations set forth in this Section 3 apply as of the date each Receivable is sold and continue with respect to each Purchased Receivable until each Purchased Receivable is fully paid by Buyer.
- Buyer Issues. Merchant agrees that in any event of cancellation, return, complaint or dispute (“Buyer Issue”) that arises between the relevant Buyer and Merchant as to the goods or services underlying a Purchased Receivable, Merchant must (a) immediately inform Balance of Buyer Issue, and (b) fully and promptly cooperate with Balance in investigating Buyer Issue, in order to ensure that Buyer will pay Balance the full amount due for the relevant Receivable. Unless Balance determines, in its sole discretion, that the Merchant is not responsible for Buyer Issue, Balance will have the right to cancel the purchase of such Receivable, return it to Merchant and be refunded by Merchant the full Purchase Price. The cancellation, return and refund of the purchase of such Receivable may incur fees to be paid by Merchant. Merchant may not resolve a Buyer Issue by agreeing to accept an amount less than the amount of the Receivable, unless Balance provides prior written consent.
- Merchant’s Required Notice to Balance. Merchant will immediately notify Balance of: (a) any dispute related to a Purchased Receivable, (b) any other known breach of warranty or default in Merchant’s covenants and agreements or change regarding representations set forth in Section 3, (c) Merchant’s discovery of evidence of insolvency of a Buyer whose Receivable is a Purchased Receivable, or (d) any Proceeding related to a Purchased Receivable or involving a dispute between Merchant and Buyer.
- Power of Attorney. Merchant makes, constitutes and appoints Balance as Merchant’s true and lawful attorney-in-fact with power of substitution and with power and authority to:
(a) endorse the name of Merchant or of any of its Representatives upon any notes, checks, drafts, money orders, or other instruments of payment as required to enforce Balance’s rights with respect to Purchased Receivables;
(b) sign and endorse the name of Merchant or any of its agents upon any Invoice, drafts against Buyers, assignments, verifications, demands under letters of credit and notices in connection with Purchased Receivables;
(c) communicate directly with Buyers to verify the amount and validity of any Purchased Receivable, to collect payment, and to resolve disputes, including executing any agreement compromising and settling any dispute arising out of the Purchased Receivables;
(d) bring suit to collect any Purchased Receivable;
(e) amend the terms of any Purchased Receivable;
(f) execute any financing statements (including amendments) to perfect Balance’s security interest in the Purchased Receivables; and
(g) notify any Buyer obligated with respect to any Purchased Receivable that the Purchased Receivables have been assigned to Balance by Merchant and that payment is to be made directly and solely to Balance.
Merchant’s attorney-in-fact, Balance, is hereby granted full power to do all necessary things to accomplish the above as fully and effectively as could Merchant. Merchant ratifies all that the attorney-in-fact shall lawfully do or cause to be done by virtue hereof. The power of attorney shall be irrevocable until Balance has irrevocably received all payments to which Balance is or may be entitled from Merchant and Buyers for Purchased Receivables. Nothing in this Section 6 restricts Balance from transferring its power of attorney and other rights to Purchased Receivables to a third party.