Explore commonly used personal finance terms.
Accounts receivable financing is a form of funding where a business uses its outstanding invoices or receivables as collateral to secure a loan or line of credit. This financing provides immediate cash flow without waiting for customer payments, helping businesses manage liquidity and cover operational expenses. It’s commonly used by companies facing cash flow challenges, as it leverages existing assets to improve liquidity without incurring additional debt. This type of financing can be structured as factoring or traditional collateralized loans.
