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Both asset based finance and cash flow finance are important sources of funding for a business for its short term(working capital) and long term(capital assets) sustainability.

Asset-based finance is a source of funding that is secured by a company’s assets.

This article looks at what is asset based finance and see the difference between the more traditional source of finance namely cash flow loan or finance.

Asset based finance:Accounts Receivables,Inventory,etc

Some features of asset-based finance include:

• Lender generally has the right to seize the borrower’s asset(s) in the event that the commitments under the loan agreement is unfulfilled;
• Normally referring to the financing by a borrower’s account receivable through factoring or invoice discounting facilities;
• However it also includes many more assets like inventory, equipment, plant and machinery, real estates, etc which can also be used to arrange asset-based loans on a revolving or term basis; Continue reading What Is Meant by Asset-based Finance? What Are some of the differences between Asset-based finance and Cash Flow-based Loans/Finance