Accounts Receivable Financing

Definition: Short-term financing technique for working capital purposes, loans to a company are collateralized by a security interest in a company's account receivables. The lender places emphasis on the credit Definition: quality of the company. This financing technique is the heart of asset-based lending industry. When account receivables serve as collateral, loans are made on a percentage of eligible assets pledged.Definition: A loan to value ratio of 70-90% is common. Ineligible accounts include those over 90 or 120 days past due, depending on the industry. Definition: [crh] A short-term financing method in which accounts receivable are collatDefinition: eral for cash advances. See: Factoring.

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