Accounts receivable financing is a method used by a business to raise additional funding using the value of its balance sheet accounts receivable. The three main methods of using accounts receivable are factoring, assigning, and pledging.
The net cash flow in or out for a business for an accounting period must be matched by changes in cash flow funding.
If we use the example cash flow statement below, the top half of the cash flow statement shows the cash flows in and out due to operating. financing and investing activities the final figure (highlighted in green) represents the net cash flow out of the business, in this case £57,000. In order for this to happen, the business must match this cash flow out with additional funding.