Buying Accounts — Receivable

Secures an asset that represents a completed commercial transaction. Critical Distinctions

: The buyer provides an upfront cash payment, typically 70% to 90% of the invoice's face value. buying accounts receivable

: The buyer takes responsibility for collecting the full payment directly from the customers. Secures an asset that represents a completed commercial

Buying accounts receivable (AR), also known as , is a financial transaction where a third-party buyer (a "factor") purchases a company's outstanding invoices at a discount to provide that company with immediate liquidity. How the Transaction Works The process typically follows these structured steps: Buying accounts receivable (AR), also known as ,

Transfers the administrative burden of collections to the buyer.

It is important to differentiate between buying receivables (factoring) and borrowing against them (financing):

: The buyer verifies the authenticity of the invoices and evaluates the creditworthiness of the end customers (debtors) rather than the seller.