Accounts receivable financing

Accounts receivable financing,

Definition of Accounts receivable financing:

  1. Accounts receivable (AR) financing is a type of financing arrangement in which a company receives financing capital related to a portion of its accounts receivable. Accounts receivable financing agreements can be structured in multiple ways usually with the basis as either an asset sale or a loan.

  2. Using amounts owed by customers as collateral in raising a secured short-term loan on a one-time or on a continuous basis. In case of a default, the lender has the right to collect receivables directly from the named debtors of the firm. It is a type of off balance sheet financing. Also called pledging of accounts receivable. See also discounting and factoring.

  3. Accounts receivable financing is an agreement that involves capital principal in relation to a company’s accounts receivables. Accounts receivable are assets equal to the outstanding balances of invoices billed to customers but not yet paid. Accounts receivables are reported on a company’s balance sheet as an asset, usually a current asset with invoice payment required within one year.

How to use Accounts receivable financing in a sentence?

  1. Accounts receivable financing deals are usually structured as either asset sales or loans.
  2. Many accounts receivable financing companies link directly with a company’s accounts receivable records to provide fast and easy capital for accounts receivable balances.
  3. Accounts receivable financing provides financing capital in relation to a portion of a company’s accounts receivable.

Meaning of Accounts receivable financing & Accounts receivable financing Definition