Accounts Law and Legal Definition

Accounts is a term that covers a wide variety of subjects, such as bank accounts, trust accounts, and others. In business accounting, accounts may be characterized as accounts payable, which is money that is owed by a business to be paid to another, or accounts receivable, which is a debt owed to an enterprise, arising out of the normal course of business dealings.

Accounts receivable financing is an arrangement with a bank, factor or other source of financing which:

  1. Provides a loan secured by the borrower's accounts receivable;
  2. Permits a borrower to retain responsibility for losses;
  3. Enables a lender to advance funds on accounts with or without notice to the borrower's customer, usually an agreed percentage of the face value of the account receivable.

Accounts receivable financing iinvolves the sale of outstanding invoices or receivables at a discount to a finance or factoring company who assumes the risk on the receivables and provides quick cash to a business.

Current accounts are those which are up-to-date on payments owed, as opposed to past due accounts, in which money owed is behind in payment.