Accounts receivable financing Meaning: Definition, Examples, and Translations
๐ธ
accounts receivable financing
[ษหkaสnts rษชหsivษbษl หfaษชnรฆnsษชล ]
Definition
business finance
Accounts receivable financing, also known as invoice financing, is a type of business financing where a company sells its accounts receivable to a third party at a discount. This provides the company with immediate cash flow rather than waiting for customers to pay their invoices.
Examples of usage
- Many small businesses use accounts receivable financing to improve their cash flow.
- Increasing accounts receivable financing can help a company grow faster.
- The main advantage of accounts receivable financing is quick access to cash.
- Accounts receivable financing is a common practice in industries with long payment cycles.
- Some companies prefer accounts receivable financing over traditional bank loans.
Translations
To see the translation, please select a language from the options available.
Origin of 'accounts receivable financing'
The concept of accounts receivable financing dates back to ancient times when merchants needed a way to convert their outstanding invoices into immediate cash. Over the years, this practice evolved into the modern business finance strategy it is today. Accounts receivable financing plays a crucial role in helping businesses manage their cash flow and maintain financial stability. By leveraging their accounts receivable, companies can access the funds they need to operate and grow their business.