Pledging Receivables in Accounts Receivables
Pledging Receivables is the act of promising future receivables as collateral for a loan. This type of financing is commonly used by businesses to free up cash flow and improve liquidity. The receivables can be either account receivable or other types of receivables such as contracts, notes, or invoices. Pledging receivables can be a way for a business to get funding without having to give up equity in the company. Pledging receivables is a type of secured lending where the receivables are used as collateral for the loan. The lender will typically advance a percentage of the value of the receivables. The business will then use the cash to finance operations or expand the business.
