Accounts receivable financing
- Accounts receivable financing
Accounts receivable financing (also known as accounts receivable funding) is the selling of invoices that are outstanding or receivables at a discount to a finance company that assumes the risk on the receivables which provides quick cash to your business. Accounts receivables over 90 days are typically not financed.
The amount of value that is assigned to the account depends on the receivable’s age. A current invoice will usually pay more. Accounts receivable financing is considered an alternative financing source for companies that may or may not qualify for traditional loans or grants.
Benefits
* immediate and dependable access to unlimited working capital
* strengthened financial statement and credit rating
* increased purchasing power; funding for expansion and growth
* possibly cash discounts for e.g. payment of accounts payable early
Who uses accounts receivable financing?
Any business that generates an invoice and delivers a product or service is eligible to use accounts receivable financing.
Industry types of accounts receivable financing
Medical Accounts Receivable Funding is a specialized funding source for the healthcare industry and is used as a source of immediate and unrestricted funding. In the healthcare industry, reimbursement delays negatively affect the cash flow and put financial pressure of the healthcare industry. With medical accounts receivable, this pressure is alleviated and the need for working capital is filled, allowing these providers and suppliers to grow their businesses.
ee also
Accounts Receivable
External links
* [http://sbinformation.about.com/od/creditloans/a/accountreceivab.htm Taking the Accounts Receivable Financing Plunge]
Wikimedia Foundation.
2010.
Look at other dictionaries:
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Asset Financing — Using balance sheet assets (such as accounts receivable, short term investments or inventory) to obtain a loan or borrow money the borrower provides a security interest in the assets to the lender. This differs from traditional financing methods … Investment dictionary
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