Assigning Accounts Receivable

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The assignment of accounts receivable may be general or specific.

A general assignment of accounts receivable entitles the lender to proceed to collect any accounts receivable of the borrowing company whereas in case of specific assignment of accounts receivable, the lender is entitled only to collect the accounts receivable specifically assigned to the lender.

In this case, Company A has pledged $200,000 of accounts in exchange for a loan of $100,000.

Assignment of accounts receivable is a written agreement between a lender and a borrower in which the borrower pledges accounts receivable as collateral.

By assignment of accounts receivable, the lender gets a right to collect the receivables of the borrowing company if it fails to repay the loan in time.

The lender also receives finance charges and service charges.It is important to note that the receivables are not sold/transferred under an assignment agreement.If the receivables have been transferred, the agreement would be of sale/factoring of accounts receivable.The principal amount is to be repaid in 45 days on November 25, 20X8, as well as interest at 10%. Retail X LTD collected all the accounts receivable pledged as collateral by November 25, 20X8.Assignment of accounts receivable is an agreement between a lending company and a borrowing company in which the later assigns its accounts receivable to the former in return for a loan.This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks.By continuing to browse this website you accept the use of cookies. The assignment of accounts receivable journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of accounts receivable assignment.In each case the assignment of accounts receivable journal entries show the debit and credit account together with a brief narrative..boxy-content a.term-action, button.term-action a.term-action:hover, button.term-action:hover .term-action-bg .term-uex .term-cite .term-fc .term-edit .boxy-dflt-hder .definition .definition a .definition h2 .example, .highlight-term a.round-btn, a.round-btn.selected:hover a.round-btn:hover, a.round-btn.selected .social-icon a.round-btn .social-icon a.round-btn:hover a.round-btn .fa-facebook a.round-btn .fa-twitter a.round-btn .fa-google-plus .rotate a a.up:hover, selected, a.down:hover, selected, .vote-status .adjacent-term .adjacent-term:hover .adjacent-term .past-tod .past-tod:hover .tod-term .tod-date .tip-content .tooltip-inner .term-tool-action-block .term-link-embed-content .term-fc-options .term-fc-options li .term-fc-options li a .checkmark .quiz-option .quiz-option-bullet .finger-button.quiz-option:hover .definition-number .wd-75 .wd-20 .left-block-terms .left-block-terms .left-block-terms li .no-padding .no-padding-left .no-padding-right .boxy-spacing @media (min-width: 768px) @media (max-width: 768px) @media print { a:link:after, a:visited:after nav, .term-action, #wfi-ad-slot-leaderboard, .wfi-slot, #related-articles, .pop-quiz, #right-block, .The financial accounting term assignment of accounts receivable refers to the process whereby a company borrows cash from a lender, and uses the receivable as collateral on the loan.

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    Accounts receivable financing is more like a traditional bank loan but with some key differences. While bank loans may be secured by different kinds of collateral, including plants and equipment, real estate, and/or the personal assets of the business owner, accounts receivable financing is backed strictly by a pledge of the business’s assets associated with the accounts receivable to the finance company.…

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  • Ways to Use Accounts Receivable as Collateral
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    Accounts receivables as collateral for a loan is a common practice utilized by many businesses that require additional capital. The lender will review a company’s financial statements, cash flow, and other information in order to determine the company’s overall risk level. How to Show Accounts Receivable as Collateral on a Report…

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  • What Is an Assignment of Accounts Receivable?
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    An assignment of accounts receivable is a process by which a company that is owed money by others signs over that owed amount to a lender in an effort to receive a loan based on its value. When individuals or companies owe money to a business, their accounts are referred to as “accounts receivable.”.…

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