Accounts Receivable Securitization
July 2011 by
By various estimates, a tally of accounts receivable as reflected in the financial statements of U.S. companies would total approximately $10 trillion, with a comparable amount outstanding in Europe and more in the rest of the world. In order to bridge the typical timing gap of cash inflows and outflows, companies frequently seek funding from lenders, factors, and the capital markets (via pledges or sales of accounts receivable). Accounts receivable financing is a highly efficient means of satisfying many financial demands and it has been employed in various forms for centuries. In addition to the older methods of factoring and asset-based loans, accounts receivable have been securitized since the 1980s, with an estimate of approximately $60 billion outstanding in the U.S.