Cash Flow vs Profit: Why Cash Flow is the Lifeblood of Business Success
Cash flow is key for business success. Learn about the definition, and how managing cash flow effectively ensures financial stability & long-term growth.
Receivables discounting is when you use your accounts receivable as collateral to borrow money.
The loan amount usually ranges between 80% and 95% of the receivables value, which you will pay back with interest and fees to the lender upon maturity.
In receivables discounting, you are not selling your accounts receivable. You simply use them to collateralize a loan. Therefore, you still own the receivables and are responsible for collecting payment from customers.
Here is an example of receivables discounting.
In this receivables discounting example, you will be given $20,000 x 85% = $17,000 upfront. This amount plus interest and fees will be repaid on or before due dates specified by the lender.
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Cash flow is key for business success. Learn about the definition, and how managing cash flow effectively ensures financial stability & long-term growth.
Learn all about bank loans, the traditional method for companies to borrow money and access capital.