What is Accounts Receivable Financing?

Accounts receivable financing refers to an enterprise transferring its own accounts receivable to a bank and applying for a loan. The bank's loan amount is generally 50% -90% of the face value of the accounts receivable. After the company transfers the accounts receivable to the bank , The buyer should be notified of the transfer and asked to pay to the financing bank

Accounts receivable financing

1. Shorten the collection period of corporate receivables; 2. Reduce transaction costs between buyers and sellers; 3. Improve the turnover rate of funds; 4. Improve the effectiveness of manpower utilization and eliminate the trouble of manual collection; 5. Optimize the enterprise Accounts receivable management, which activates assets other than fixed assets for enterprises; 6. Increases operating turnover through accounts receivable and strengthens financial scheduling capabilities.

The borrower shall be an enterprise legal person approved by the State Administration for Industry and Commerce, registering for annual inspections in accordance with regulations, achieving independent accounting, and establishing a modern enterprise system.

Borrower application

1. Make a written application

2. Provide the following materials:

(1) Submit

(1) Assigning of receivables (Assigning of receivables), that is, the supplier company uses the debt of the account receivables as collateral to finance the financing institution. After the financing institution mobilizes funds to the supplier company, Or it is unable to pay, and the financing institution has the right of recourse for requesting the supplier to repay the financing funds.

(2) Factoring of receivables, that is, the supplier company sells the debt of the account receivable to the financing institution and notifies the buyer to pay directly to the financing institution, and transfers the risk of account collection to the financing institution. The financing institution must Undertake all collection risks and absorb credit losses, and lose recourse to financing companies.

(3) Account receivable securitization is a part of asset securitization, which refers to the conversion of accounts receivables of enterprises that lack liquidity but can generate predictable stable cash flows into financial markets that can be sold and circulated Financing of securities.