When a company's receivables are used as security for a loan, the company is said to have pledged its receivables.
Accounts receivable pledging occurs only when any business uses its accounts receivable asset as collateral on any loan, generally a line of credit.
When accounts receivables are used in this given manner, the lender only limits the amount of the loan to either:
70% to 80% of the total amount of outstanding accounts receivable or
a percentage of the accounts receivable which declines based on the age of the receivables.
To know more about pledging of recievables here:
https://brainly.com/question/15013724
#SPJ4
