How Do You Spell ASSIGNMENT OF ACCOUNTS RECEIVABLE?

Pronunciation: [ɐsˈa͡ɪnmənt ɒv ɐkˈa͡ʊnts ɹɪsˈiːvəbə͡l] (IPA)

The spelling of "ASSIGNMENT OF ACCOUNTS RECEIVABLE" follows the English language phonetic rules. The word "assignment" is pronounced /əˈsaɪnmənt/, meaning the act of assigning or transferring something. "Accounts" is pronounced /əˈkaʊnts/, referring to the financial records of an individual or organization. Finally, "receivable" is pronounced /rɪˈsiːvəbl/, which means able to be received or collected. In summary, the word "ASSIGNMENT OF ACCOUNTS RECEIVABLE" refers to the transfer of financial records that can be received.

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ASSIGNMENT OF ACCOUNTS RECEIVABLE Meaning and Definition

  1. Assignment of accounts receivable refers to the process by which a company transfers or sells its unpaid invoices or receivables to a third party, often referred to as a factor. This arrangement allows the company to convert its outstanding accounts receivable into immediate cash flow, rather than waiting for customers to pay.

    The assignment of accounts receivable involves the company (assignor) selling the rights to collect on its outstanding invoices to the factor (assignee). In exchange for the transfer, the assignor receives a discounted amount of the value of the receivables upfront from the factor. The factor then assumes the responsibility for collecting the outstanding sums from the customers directly.

    This financial technique is commonly used by businesses to improve their cash flow and reduce the risks associated with late or non-payments. It provides immediate liquidity for the company by accelerating the collection of funds, which can be used to reinvest in the business, pay off debts, or meet other financial obligations.

    In an assignment of accounts receivable, the factor typically charges a fee for assuming the collection risk and advances a portion of the receivables' value to the assignor. The factor assumes the risk of collecting the outstanding amounts owed by customers, while the assignor receives a predetermined cash amount based on the discounted value of the invoices.

    Overall, the assignment of accounts receivable helps businesses optimize their working capital and manage their cash flow effectively.

Idioms with the word ASSIGNMENT OF ACCOUNTS RECEIVABLE

  • Assignment of Accounts Receivable The idiom "Assignment of Accounts Receivable" refers to the process of transferring the right to collect payments owed to a company from its customers or clients to another party, typically a lender or factor. This arrangement allows the company to obtain immediate funding based on the value of its outstanding accounts receivable, providing it with much-needed cash flow. The assignee then assumes the responsibility of collecting the payments directly from the customers, often charging a fee or interest for the service.