Receivables Discounting: Things You Need To Know

Receivables Discounting: Things You Need To Know

Written and published by
Brian Tsang

What is receivables discounting?

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.

Receivables discounting example

  • You sold $20,000 of goods to your customer on credit.
  • You then secure a 85% loan using the $20,000 receivables as collateral.
  • You will repay the loan (with interest and fees), ideally after collecting payment from your customers.

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.

Learn more:

About Choco Up

Founded in 2018, Choco Up is the leading revenue-based financing platform in Asia Pacific, offering non-dilutive growth capital to fast-growing companies. 

Currently covering more than 10 markets and 10 sectors, Choco Up has helped hundreds of businesses capture growth while protecting equity upside.

Click here to apply for RBF funding!


Ready to scale your business faster?

Choco up invests from $10K to $5M USD on a revenue share model. We'll simply take a fixed percentage of your sales until we have recouped the capital + flat fee.