Pledging Receivables
Pledging receivables means a business using its accounts receivable (money owed by customers) as collateral to secure a loan. Here, the company agrees that if they can’t repay, the lender can collect the customers’ payments.
Suppose a furniture company has $100,000 in accounts receivable. The company can pledge these receivables as collateral to get a quick loan. If customers default, the lender can collect their payments.