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Pledging accounts receivable & factoring accounts receivable

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What is the difference between pledging accounts receivable and factoring accounts receivable?

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Solution Summary

This question involves the fundamentals of pledging accounts receivable and factoring accounts receivable.

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Pledging AR:

The transfer of a receivable from the previous creditor (assignor) to a new creditor (assignee).
source: http://help.sap.com/saphelp_470/helpdata/en/79/8bddcd9ef8d211b1d10004ac56b168/content.htm
Factoring AR:
What is factoring? Factoring is the process of purchasing commercial invoices from a business at a discount. Factoring is essentially a credit service designed to improve cash flow - the factor assumes the credit risk of loss ...

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