ACCOUNT SALE Meaning and
Definition
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Account sale refers to a financial transaction where a company or an individual sells their existing accounts receivable to a third party, known as the factor or a financial institution. This transaction is commonly used as a form of financing to improve cash flow by converting outstanding invoices into immediate cash. It is often utilized by businesses facing liquidity issues, as it provides them with instant funds instead of waiting for customers to clear their outstanding invoices.
In this process, the seller (also known as the assignor) transfers the ownership rights of their accounts receivable to the factor (assignee) in exchange for a discounted amount of the total receivables. The factor then assumes responsibility for collecting payments from the customers, thereby reducing the burden of collection efforts on the seller.
The account sale typically involves a legal agreement between the assignor and assignee, outlining the terms and conditions of the sale, such as the amount of receivables sold, the fee charged by the factor, and the duration of the arrangement. It is crucial for the seller to carefully analyze the terms and evaluate the cost versus benefits of the transaction before entering into this arrangement.
Overall, account sale serves as a strategic financial tool that allows businesses to efficiently manage their cash flow, enhance liquidity, and reduce credit risk associated with outstanding invoices.
Common Misspellings for ACCOUNT SALE
- zccount sale
- sccount sale
- wccount sale
- qccount sale
- axcount sale
- avcount sale
- afcount sale
- adcount sale
- acxount sale
- acvount sale
- acfount sale
- acdount sale
- acciunt sale
- acckunt sale
- acclunt sale
- accpunt sale
- acc0unt sale
- acc9unt sale
- accoynt sale
- accohnt sale
Etymology of ACCOUNT SALE
The term "account sale" does not have a specific etymology since it is a combination of two common words: "account" and "sale".
- "Account" has its roots in Middle English and Old French, deriving from the Latin word "computare" which means "to compute" or "to count". It originally referred to the action of counting or calculating various transactions.
- "Sale" also has its roots in Middle English and Old English, derived from the Old Norse word "sala" meaning "a sale" or "to sell".
When combined as "account sale", the term refers to a statement or record of transactions, usually in a business context, showing the sales or purchases made by a particular account or customer.
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