Receivable: Buying Accounts

Transfers the administrative burden of collections to the buyer.

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:

Provides immediate cash flow to meet payroll or operational expenses without taking on traditional debt. buying accounts receivable

: A business provides its unpaid invoices for completed goods or services to the buyer.

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

Easier to qualify for than bank loans, as it relies on customer credit. : Earns a profit from the discount and service fees.

: The buyer takes responsibility for collecting the full payment directly from the customers. : A business provides its unpaid invoices for

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