Accounts receivables finance unlocks the cash that is owed to the small company by selling the invoice. So, technically it is not lending, but an asset purchase. You are raising cash against your debtors. “Accounts receivable” is more of an expression used in the United States than the UK.
There are two types of account receivables finance:
INVOICE DISCOUNTING
First there is invoice discounting , a form of asset based finance which enables a business to release cash tied up in an invoice and unlike invoice factoring enables a client to retain control of the administration of its debtors.
FACTORING
Secondly, there is factoring. Accounts receivable factoring is usually used by companies that are smaller than those that use invoice discounting. The difference between factoring and invoice discounting is that the credit control function in a factoring facility is outsourced and that the facility is disclosed. Factoring is the sale of receivables, whereas invoice discounting is borrowing where the receivable is used as collateral.
Also see...
Factoring vs invoice discounting
ACCOUNTS RECEIVABLES FINANCING - HOW KRIYA CAN HELP
Our invoice financing solutions allow you to get an advance against your outstanding customer invoices – either on a selective or whole ledger basis.
It’s quick and easy to access funds, which means you can get the cash flow you need to get on with business. With Kriya, you get:
- Fast funding: quick funding decisions and set-up
- Hassle free experience: easy to use digital interface
- Help in real-time: personal customer support
- Straightforward costs: no hidden fees
