Buying Accounts Receivable -

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

Secures an asset that represents a completed commercial transaction. Critical Distinctions Buying accounts receivable (AR), also known as ,

: Once the customer pays, the buyer remits the remaining balance to the seller, minus a factoring fee (usually 1% to 5% ). Key Benefits for the Parties Involved For the Seller : Critical Distinctions : Once the customer pays, the

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

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