Accounts Receivable Financing

- On accounts receivable lending, a separate account is established with a commercial bank, whereby remittances from your customer are deposited in that account. The commercial finance company then has a simultaneous deposit to your regular account, less the amount of the daily interest. At no time will your customers be made aware of the fact that you have their accounts pledged for a receivables loan, but the principle of dominion under the Uniform Commercial Code requires that remittances be deposited in the control of the lender. Generally speaking, the record-keeping process for accounts receivable loans is not cumbersome and is usually based on a photocopy or carbon copy of your existing sales records.

Factoring

-Line of credit without the limitations of a typical bank line of credit.  The oldest way of loaning against receivables is called factoring. Technically, it is not a loan against the receivables because the factor actually purchases the receivables and in some cases there is no further recourse for lack of payment on the receivable. With Some Factoring services, the borrower is not responsible for collection of the receivables.

Accounts Receivable/ Factoring Application