What is financing in accounts receivable?

[accounting lads]

Accounts receivable financing refers to financing when a company funds itself based on the accounts received through its receivables- the customer invoices. Instead of customers making payments, companies sell or pledge their receivables to a lender so that they can get some immediate cash. This aids in enhancing cash flow, expenditure settlement or growth. It is particularly beneficial to the businesses which have slow payment customers. Naturally, the lender e charge some interest or fee, and the receivables are the security against which the customers pay their debts.

[Author]

Posts