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Finance Accounts Receivable

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 and usually, a current asset with invoice payment is required within one year.

 

Using Accounts Receivables 

  • Accounts receivable financing is what would allow a business to receive early payments on what would be their outstanding invoices.

  • All parties involved need to work towards finding a middle ground during negotiations and agree to the sell upon terms.

  • Three types, which include: Traditional Factoring, Asset Based Lending (ABL), and Selective Receivable Finance.

 

What Is Accounts Receivable?

​Accounts receivable financing is what would allow a business to receive early payments on what would be their outstanding invoices. When doing so, a company commits a given amount, either all or a portion, of its outstanding invoices to the funder for early payment. This financial process can also come at a cost an additional fee.

 

Three Primary Types Of Accounts Receivable

​For a business, the three primary types of accounts receivable are traditional factoring, asset-based lending, and selective receivables. Depending on the business, one of these three may be an option better suited for your needs.

Is Accounts Receivable The Correct Choice For Your Business?

Accounts Receivable may be the correct financial tool for your business, but it is important to have a full understanding of the financial options available before making a choice.

Final Thoughts

​Depending on the business, accounts receivable financing may be just what is needed when the need arises. Instead of having capital tied up in unpaid invoices, use it to hire new personnel, buy new equipment, or even further stock inventory. Before deciding on any financial product, it’s important for the business to understand the terms and conditions of the loan and to ensure it truly meets the needs of the business.

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