What is Accounts Payable Financing?
Accounts Payable Financing allows a company to pay its supplier immediately (cash on delivery or COD) without having to use their own working capital. This is also known as trade credit financing. This type of financing gives the company a longer term to pay back the creditor or when they sell the inventory.
RELATED TERMS
- Accounts Payable (A/P)
Accounts payable (A/P) - The money a company owes its vendors. When one company transacts with another on credit, one will record an entry to accounts payable on their books while the other records an entry to accounts receivable.
- Accounts Receivable (A/R)
Accounts Receivable are monies owed to a company by their customers (another business, a government entity or individual) for goods or services sold on terms. Accounts receivable are a Current Asset on a company’s Balance Sheet. In most businesses, the…
- Accounts Receivable Financing
Accounts Receivable Financing is when a company turns its A/R (accounts receivable) into ready cash versus waiting 30, 45 or even 90 days for their monies. Banks and Asset Based Lending (ABL) finance companies offer this short-term business funding based…