Accounts Receivable Financing
Accounts Receivable Financing, often referred to as factoring, is asset-based financing in which a borrower company uses the money owed to the business by its customers (accounts receivable) as collateral to secure a loan from a lender. The lender can collect on the debt directly from the customers.
This type of financing tends to be rare in website financing deals as most websites take full cash payments up-front before shipping their products. As such accounts receivable are generally all paid up at any given time. But it may be used by Internet businesses that do have 30-, 60-, 90-day, or other payment terms with their customers.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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