Definition: is a process when a company or a business uses its receivables as the collateral in order to get a loan for a company and receive enough cash for its operations. Receivables imply the money owned by customers or the outstanding invoices. The company that gets those receivables (a factoring company) provides the original company with the amount of funds that is equal to the reduced value of the receivables. Accounts receivable financing is an operation that can allow a business to obtain working capital fast and efficiently without the need to go through a long and complicated process of applying for a bank loan.
In a Sentence:
If we proceed with the accounts receivable financing, we may get up to 85% of the invoice amount.
Accounts receivable financing will require the factoring company to estimate our clients’ credit, not ours.
Because our clients are reliable and credit-worthy, accounts receivable financing is a great option for us to obtain the needed capital fast.
Synonyms and related words: pledging of accounts receivable, factoring, collateral, factoring company, receivables, outstanding invoices