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Finance Dictionary and Glossary of Investment Terms
Accounts receivable financing
A short-term financing method in which accounts receivable are collateral for cash advances. See: Factoring.
The selling of a company's accounts receivable, at a discount, to a factor, who then assumes the risk of the account debtors and receives cash as the debtors settle their accounts. A firm that sells its accounts receivable may not be confident of its ability to collect those debts, or might think that the cost of collecting that debt is more than the discount which must be provided to the factor when of selling their receivables. also called accounts receivable financing.