Master Accounts Receivables Purchase Agreement

As businesses grow, they often find themselves in need of financing to support their expansion plans. This is where master accounts receivable purchase agreements (MARPA) come into play. MARPAs are financial instruments that allow businesses to sell their accounts receivable to a third-party financing company, known as the factor, in exchange for immediate cash. This article explains what MARPAs are and how they work.

What is a Master Accounts Receivable Purchase Agreement (MARPA)?

A MARPA is a contract between a business and a financing company. It allows the business to sell its accounts receivable to the financing company at a discounted rate. The financing company, acting as the factor, then collects the payments from the customers on behalf of the business. In essence, the MARPA allows businesses to convert their accounts receivable into cash, providing them with immediate working capital.

How does a MARPA work?

The MARPA process works in the following steps:

1. The business delivers its invoices to the financing company, which then reviews them to determine their eligibility for funding.

2. Once the financing company approves the invoices, it advances a percentage of the total value of the invoices to the business (typically 70-90%).

3. The financing company then collects the payments from the customers on behalf of the business.

4. Once the financing company has collected the payments, it deducts its fees and charges and remits the balance to the business.

Benefits of a MARPA

There are several benefits of using a MARPA for businesses, including:

1. Immediate cash flow: By selling their accounts receivable, businesses can get immediate cash flow to support their operations.

2. Reduced risk: MARPAs shift the risk of non-payment from the business to the financing company, reducing the risk of bad debt.

3. Improved cash flow management: With a predictable and steady cash flow, businesses can better manage their cash flow and plan for growth.

4. Access to financing: MARPAs provide businesses with access to financing that might not be available through traditional lending channels.


MARPA is a valuable financial tool that allows businesses to convert their accounts receivable into immediate cash, providing them with the financial flexibility they need to grow their operations. If you are considering using a MARPA, it is important to work with an experienced financing company to ensure that you get the most favorable terms and conditions.

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