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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?

    © BrainMass Inc. brainmass.com December 24, 2021, 4:56 pm ad1c9bdddf

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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 ...

    Solution Summary

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