Short Term Working Capital B11-10b

Provide some advantages and disadvantages of pledging accounts receivable.

  1. Advantages:
    • Provides cash for general use; compensating balances are not required; commonly available; flexible as receivables is a dynamic asset.
  2. Disadvantages:
    • Cost may be greater than other forms of financing.
    • Requires repayment in the short-term.
    • Accounts are committed to the lender.
February 23, 2019 | |