Accounts receivable financing can be defined as a method of asset financing wherein a company uses the money that is owed to it by customers, also known as receivables, as security for getting additional finances. The amount that the company receives in return for this is equivalent to the reduced value of the receivables. An important factor that determines the amount of finances received by the company is how old the receivables are. Receivables that are more recent will fetch the company a higher amount compared to older receivables. This method can be a good substitute for bank financing methods. There are two ways in which accounts receivable financing can be used by a company.

Pledging Accounts Receivable
Pledging refers to using accounts receivable by the company as a security for borrowing money to manage its finances. However, one thing that must be remembered in this case is...

Finance is one of the most important aspects of running a business, no matter how big or small it is. Most companies have their own finances in place for investing in business, while some others get a bank loan whose funds are utilized in their business. But there are times when both these options may not be feasible for a business, especially in the case of small businesses. This is where the presence of purchase order funding firms comes to the rescue.

What is purchase order financing?
Purchase order financing is a funding option through which small businesses, which do not have sufficient cash flow or working capital to run the business, take financial aid in order to fulfill a huge order that they may have received. Purchase order funding provides the business with funds which it can pay upfront to suppliers so that the cash reserves of the company stay intact. It is mainly...