Accounting for the assignment of accounts receivable (as collateral) for loan (note) versus factoring accounts receivable where the holder of the accounts receivable sells the receivables to a financing institution for cash less a financing charge, the holder of accounts receivable can transfer (or assign) the receivables for cash either as (1) selling the receivables (factoring receivables) where the seller surrenders control receivables and records a sale of an asset (accounts receivable) on the balance sheet or (2) thru secured borrowing where the receivables are assigned (pledged) for for a loan (notes payable) the seller secures from a financing institution, payments received on the receivables are used to pay off the loan (notes payable), where the seller maintains control of receivables and records a liability (notes payable) on the balance sheet the example demonstrates both methods (1) factoring receivables and (2) assigning receivables to generate immediate cash on the receivables, the basic differences of the methods are demonstarted, detailed accounting example by Allen Mursau

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